Breifly Discuss the Basic Functions performed by the Central Bank in order to control Money Supply in an econ

central bank plays an vital role to control money supply.with the two importance pointi.e


CRR %26amp; CSR


Crr-- cash reserve ratio-through this the central bank control over cash money supply in an economy.Breifly Discuss the Basic Functions performed by the Central Bank in order to control Money Supply in an econ
When you say ';Central Bank'; I presume you are in Europe? In any case, a country's central bank, Federal Reserve Bank, or what ever it may be called does several things. It lends money to other banks within its federal system, for one thing. Secondly, a central bank buys and sells foreign currency. Third, a CB works to keep its country's inflation at a reasonable level. This is accomplished by various methods including raising or lowering its interest rate charged for loans to its member federal banks. As inflation increases, the CB will raise the charged interest rate to ';cool off'; the economy by making it more expensive to borrow. The key to these rate changes is to control inflation without damaging or slowing the economy either too much or too quickly.