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Discuss Scope and Area of ​​Central Bank

Scope and Area of ​​Central Bank Known as an independent and self-governing financial institution, the central bank plays an important role in the economic welfare of a country.

One of the objectives of the central bank is to ensure the welfare of the people and to put the country’s economy on a strong footing. Therefore, this bank actually promotes the economic development of the country by adopting and implementing the economic plan of the country.

Established as the central bank of Bangladesh, the state-owned Bangladesh Bank played a pivotal role in guiding the country’s banks and building a well-organized banking system.

The scope of the Central Bank is briefly discussed in the form of a table below:

Issue of notes and coins:

The central bank is the most authorized financial institution by the government which enjoys exclusive rights to issue currency in the country.

The central bank, with the permission of the government, keeps the country’s economy afloat by circulating and controlling notes and currencies according to market demand.

This makes the exchange easier. However, in case of issue of notes, the bank has to keep a certain amount of reserves.

Maintenance of the value of currency:

The central bank works to preserve the value of domestic currency in the international market and to keep the currency stable in the domestic market.

Therefore, the central bank saves money by maintaining a moderate level of inflation by increasing and decreasing the supply of money in the market through debt control. It also maintains the value of the domestic currency in the international market by controlling the exchange rate.

In this context, Prof. Kisch & Elkin said, “The central bank is a bank whose main function is to keep the currency stable. Scope and Area of ​​Central Bank.

Banker to the Government:

The central bank assists the government in saving the money of the government and in carrying out all the financial transactions of the government.

The Guardian of the money market:

The central bank acts as the guardian of the money market and the full regulator of the currency.

Banker to the other bank:

The central bank acts as the banker of the listed and unlisted banks of the country, in which case the listed commercial banks are directly controlled by the central bank. Conditionally its members Either he calls all the banks listed banks.

At present there are 56 commercial banks listed by the Central Bank in Bangladesh. All these commercial banks are operated and regulated under the Central Bank. That is why the central bank is called the banker of other banks. .

Lender of the last resort:

The central bank stands by the listed commercial banks of the country at any moment of crisis. Commercial banks usually turn to the central bank when it is not possible to raise funds from any source when they are in financial crisis.

In this case, the central bank helps them with loans. That is why the central bank is called the last resort of loans.

In this context, Professor Hutte said, “The central bank is the last refuge of loans. ”(Central bank is the lender of the last resort).
Scope and Area of ​​Central Bank

Foreign currency control:

The central bank controls the inflow and outflow of foreign exchange to keep imports and exports favorable to the country’s economy.

The central bank also controls the foreign exchange rate of the country’s currency to create a respectable exchange rate.

Again, this bank plays a role in keeping the exchange rate of the country at a desirable level by maintaining adequate foreign exchange reserves.