Briefly explain the major functions of a central bank.

1. Monetary policy: Central banks are responsible for formulating and implementing monetary policy to achieve price stability, control inflation, and promote economic growth.

2. Issuing currency: Central banks are the sole authority responsible for issuing and regulating the supply of a country's currency.

3. Banker to the government: Central banks act as the government's banker, managing its accounts, handling its borrowing needs, and providing financial services.

4. Banker to commercial banks: Central banks serve as lenders of last resort to commercial banks, providing liquidity in times of financial crisis and ensuring the stability of the banking system.

5. Foreign exchange management: Central banks manage a country's foreign exchange reserves, intervene in foreign exchange markets to stabilize the currency, and implement exchange rate policies.

6. Financial stability: Central banks monitor and regulate the financial system to ensure its stability and prevent systemic risks that could threaten the economy.

Major Functions of a Central Bank:

- Monetary Policy:
- Controls the money supply to influence inflation, economic growth, and unemployment.
- Financial Stability:
- Oversees the financial system to prevent crises and ensure stability.
- Bank Supervision:
- Regulates and supervises banks and other financial institutions to ensure their safety and soundness.
- Payment Systems:
- Provides and manages payment systems to facilitate financial transactions.
- Currency Management:
- Issues and manages the national currency, including printing, distribution, and anti-counterfeiting measures.
- Government Finance:
- Manages the government's finances, including issuing debt and holding foreign exchange reserves.
- Economic Research and Analysis:
- Conducts economic research and provides analysis to support policy decisions.