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Shift 09/06/2023 3:30 PM - 6:30 PM
Correct Answer
Certainly, let me explain the reasons behind the functions of a central bank:
1. (B) Lender of last resort: A central bank acts as the lender of last resort to provide financial assistance to commercial banks or other financial institutions during times of financial crisis or liquidity shortage.
2. (C) Issue of currency: The central bank has the authority to issue and manage the country's currency. It regulates the money supply in the economy by controlling the issuance and circulation of currency.
3. (E) Banker's Bank: The central bank functions as a banker's bank by providing banking services to other banks. It maintains accounts for commercial banks, facilitates clearing and settlement of interbank transactions, and acts as a custodian of their reserves.
These functions are integral to the role of a central bank in maintaining financial stability and regulating the monetary system of a country. Other options, such as money creation (A) and accepting deposits from the public (D), are not typically direct functions of a central bank. Therefore, the correct answer is (1) (B), (C), (E) Only.
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