PHYSICS Lecture 1: Chapter_4_4_Central_Banking_327f366c
Document Summary
A central bank is the apex bank which controls the entire banking system of a country. It has the sole authority to issue notes in that country. It also acts as a banker to the government and controls the supply of money in the country. Differences between the central bank and a commercial bank. The central bank is the apex bank and is also known as a bank of all the banks. A commercial bank functions under the control of the central bank. The central bank focuses on social welfare, whereas a commercial bank focuses on profit maximisation. The central bank does not accept deposits, whereas a commercial bank accepts deposits from the public and provides loans to individuals and households. The central bank issues currency, whereas a commercial bank has no authority to issue currency. The central bank is an advisor to the government on monetary issues, whereas a commercial bank is not an advisor.
