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Functions of the central bank

Answer Text:
FUNCTIONS OF THE CENTRAL BANK
This is a bank established by the government through the act of the parliament to manage and control the monetary matters in the country. It was formed to perform the following functions;
-Issue currency in the country, which includes both new notes and coins to replace the worn-out ones
-Banker to the commercial banks, by ensuring that all the commercial banks in the country operate an account with them.
Being the government’s bank- by offering banking services to the government which enables the government to operate an account with them
-Advisor to the government on financial issues in the economy
-Controller of the commercial banks on how they carry out their functions in the economy to ensure that their customers are served well
-Provide links with other central banks in other countries, facilitating financial relationships. It also provide a link between the country and other financial institutions such as IMF.
-Maintain stability in the exchange rates between the local currencies and the foreign ones.
-Act as the lender of the last resort to the commercial banks to enable them meet their financial obligations when need arise
-Facilitates the clearing of cheques between different commercial banks through its clearing house (a department in the central bank).