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Question
State with reason whether you agree or disagree with the following statement.
Central Bank having monopoly of note issue is most appropriate institute of the government.
Solution
Yes, the above statement is correct. The Central Bank is the most appropriate institute of the government for issuance of notes. This is because of the following points:
i. It ensures uniformity in note making.
ii. It ensures a control on the issuance of notes and thus, controls the overall issue of currency.
iii. It increases the confidence of the public in the currency, as there is uniformity in it.
iv. Since there is just one agency for the issuance of notes, it becomes convenient for the government to supervise and monitor its operations.
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