Objectives of Central Banks
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State the objectives of central banks. Or,
Discuss the implications of central banks
The central bank is the focal point of the entire banking system of the country. Some economists are objective He called the central bank as an institution. Governments of various countries advise or mandate the central bank to formulate and implement its monetary policy in such a way as to maintain economic development and economic stability. The economic strength of a country largely depends on the implementation of the central bank's policies and objectives.
Purpose of Central Bank: Below is the central bank Objectives discussed are:
Protection of National Interest
Protection of national interest is one of the main objectives of the central bank. The symbol of national economic independence and sovereignty of a country is the central bank of that country. In this case, the central bank is in the national interest Various economic policies are formulated and implemented.
Economic development
At present, various central banks of the world are formed on the basis of planned economic development. For the purpose of economic development, the central bank manages the entire economy of the country. To this end, the central bank to accelerate the pace of economic development Takes initiative in expansion of agriculture, industry and trade.
Currency Market Control
One of the central bank's objectives is to properly control and manage the currency market for the sake of the country's economic development. It is desirable to have the central bank under state ownership for proper control and development of the currency market.
Note issue and debt control
Controlling the amount of debt is essential to maintain economic stability. Only the government central bank can control the debt. Moreover, the central bank issues notes for smooth execution of economic functions. So note issuance and credit control are considered as one of the special objectives of the central bank.
Foreign exchange rate control
The central bank controls the foreign exchange rate of the domestic currency by buying and selling foreign currency. In other words, the central bank protects the economic stability and helps in international trade by determining and maintaining the foreign value of the domestic currency.
Capital formation
Capital formation is an important and essential element for economic development. The central bank makes special arrangements for the accumulation of savings for the purpose of capital formation.
Implementation of financial policy of the government
The economic and social development of the country largely depends on the implementation of the financial policy of the government. Central Bank plays an important role in achieving economic development through proper coordination of government fiscal policy and monetary policy. Hence the implementation of the government's monetary policy is a special objective of the central bank.
Maintaining the stability of the price level
For the central bank to maintain the stability of the commodity prices, it is easier to maintain the economic development. In this case, the central bank controls inflation and currency contraction to maintain price stability. Therefore, one of the main objectives of the central bank is to maintain the stability of the price level.
Providing assistance and advice to the government
The central bank is established to provide necessary assistance and advice to the government on economic matters. The central bank plays a neutral and impartial role in this regard. The central bank facilitates the economic activities of the government by assisting and advising the government.
Foreign Economic Relations
In terms of economic relations, every country in the world is dependent on each other. One of the special objectives of the central bank is to protect foreign economic relations for the sake of economic development of the country.
In view of the above discussion, it can be said that apart from the objectives mentioned above, the gold reserve number is used by the central bank for monetary neutrality, maintaining high level of employment, increasing investment etc.