Why did Central Banking originate? Are today's objectives the same as when central banking started?

Why did Central Banking originate?

Are today's objectives the same as when central banking started?

Expert Solution

Answer :- The Central Bank has been established in almost all the countries of the world. A Central banking system is usually controlled and quite often owned, by the government of country. The Reserve Bank of India (RBI) is such a bank in India. (Central / Apex bank of India - Reserve Bank of India). The Central Bank was originated in India in year 1931 to regulate the issue of bank notes and the keeping of reserve with a view to securing monetary stability in India and generally to operate the currency mechanism and credit system of the nation to its advantage.

Yes, the objectives of Central banking were same when at the time they have initially started. The objectives of central banking are (were) as follows:-

a). Abolishing of weaker currency system. (To maintain the currency system of nation to a stronger level).

b). Pursuing appropriate credit policy.

c). Acting as Banker's Bank. (Central bank is the banker's bank and it has control over the cash reserves of the commercial banks in nation)

d). Control over Banking system in nation and

e). Leadership in the Money market.

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