What is a Central Bank?

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In the monetary and banking set-up of a country, central bank occupies central position and perhaps, it is because of this fact that this is called as the central bank. In this way, this bank works as an institution whose main objective is to control and regulate money supply keeping in view the welfare of the masses.

It is very difficult to give a precise, definite and well accepted defi­nition of central bank. Various economists have tried to define the central bank on the basis of various functions performed by it. However, there is hardly any definition which covers all the functions of central bank.

In the words of Samuelson, “A Central Bank is a bank that the government sets up to help handle its transactions, to co-ordinate and control the commercial bank and most important, to help control the nation’s money supply and credit conditions. “

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De-kock has defined central bank in the following words:

“A Central Bank is a bank that the government sets up to help handle its transactions, to co­ordinate and control, the commercial bank, and most important to hold control the nation’s money sup­ply and credit institutions.”

Looking at the definitions stated above, a central bank may be defined in the following words:

“Central Bank is a bank which has the monopoly of note-issue, and which controls and regulates banking and monetary activities, money supply and volume of credit in a country.”

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