Advertisements
Advertisements
Question
The Central Bank is the apex monetary institution of the country. Explain its role of a custodian of foreign exchange reserves.
Solution
As a custodian of the cash reserves of the commercial banks, the central bank maintains the cash reserves of the commercial banks. Every commercial bank has to keep a certain percentage of its cash reserves with the central bank by law.
APPEARS IN
RELATED QUESTIONS
______ is a quantitative method of credit control.
The process of buying and selling of securities by the central bank of a country is known as ______.
State the impact of an increase in Cash Reserve Ratio on loanable funds.
Define the following term:
Cash Reserve Ratio.
Briefly explain the following credit control method adopted by the Central Bank.
Publicity
Briefly explain the following credit control methods adopted by the Central Bank.
Moral persuasion
Central bank is the lender of the last resort. Explain.
Which of the following statements are correct and which are incorrect? Give reasons.
- Central bank is a currency authority.
- Bank rate is a qualitative method of credit control.
- Quantitative methods regulate direction of credit.
- Bank rate is the rate at which commercial banks give loans to the public.
- Central bank should sell government securities when credit is to be expanded.
Identify the following Credit Control measures undertaken by the Central Bank during inflation.
The Central Bank increases the rate at which it lends to the Commercial Bank.
What is meant by Legal Reserve Ratio?
