Objective of Central bank

January 12, 2021


Objective of Central bank

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.


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