QS Study

“Central Bank is the Guardian of Money Market”

The Central bank is at the peak of all financial institutions and banks. As a guardian of the money maker, it takes all necessary steps. To make a powerful and sound money market, Central bank control and direct the money market. It does the following activities as the guardian of the central bank:

  • Policymaking, planning development, and implementing to create a powerful and sound money market.
  • It helps in case of establishment of financial institutions.
  • Establishing the stability of the value of currency through credit control.
  • To keep the balance between local currency with foreign currency control, bank select the suitable rate of exchange.
  • Circulation of money is kept at an optimum level to reduce inflation.
  • Give advice and information to the government in case of economic decision making.
  • Taking necessary steps to control default at culture.
  • Accelerating export and discouraging import.
  • Creating and imposing of law for the purpose of public welfare.
  • Trying to speed-up and updating economy in comparison to the developed country.

No money market can exist without the central bank. The central bank is the lender of the last resort and controller and guardian of the money market. By doing the above all activities central bank works for commercial banks as the shade in summer. It is said that ”Central bank is the leader, king, and sun of banking world”.

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