Central bank is the main financial institution in any country
which is sole and monopoly over the financial matter like issue notes. It is
responsible to expansion and transaction of money in the favor of country. They
perform May objective but some are as under:
To
control of inflation and deflation
Prices rises inflation value of money falls. Demand and market
contract, investment discourages, it badly affects G.N.P, employment export and
per capital income saving fall reverses the case in deflation. Both of harmful
for the growth of economy
To
Increase the rate of economic growths
Central bank expands the credit for development. It controls the
supply of money to check inflation. More credit encourages investment. It
develops the resources. It increases the rate of economic growths. It expands
the G.N.P. there is economic welfare.
To
achieve full employment level
Employment is the major problems of the third world countries.
Central bank promotes investment. It increases G.N.P. It crates the jobs for
the people. Full employment level is achieve by and by
To
stable the price
Resources develop in economic development. G.N.P expands. It
reduces the gap between total demand and total supplies of goods. It let the
prices down. It stables the price. The value of money rises.
To
Promote Exports
Higher G.N.P and stables prices promote exports. It increases
the foreign exchange and it expands the foreign exchange reserves. It increases
the external values of money. The balance of payment improves.
