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Banking & Monetary Policy
Difference Between the Central Bank and a Commercial Bank 1. Accept Deposit and Lends Money: (a) Central Bank: The central bank is the apex bank (the bank of all banks in the country). It accepts deposits from the commercial banks and advances loans to them. (b) Commercial Bank: A commercial bank isRead more
Difference Between the Central Bank and a Commercial Bank
1. Accept Deposit and Lends Money:
(a) Central Bank: The central bank is the apex bank (the bank of all banks in the country). It accepts deposits from the commercial banks and advances loans to them.
(b) Commercial Bank: A commercial bank is that financial institution which accepts deposits from the general public and offers loans to the people for the purpose of consumption and investment.
2.Supply of Money :
(a) Central Bank: The central bank regulates the supply of money, besides being the principal source of money supply in the economy.
(b) Commercial Bank: A commercial bank only contributes to the supply of money by way of credit creation.
3. Custodian of Forex Reserves:
(a) Central Bank: The central bank is a custodian of forex reserve of the country. It conducts ‘managed floating’ to regulate exchnage rate of the domestic currency.
(b) Commercial Bank: A commercial bank is not a custodian of forex reserves of the country. However, it deals in the sale and purchase of foreign exchange for the purpose of profit only.
4. Note Issuing Authority:
(a) Central Bank: The central bank is a note issuing authority. It is a currency authority of the country.
(b) Commercial Bank: A commercial bank is not a note issuing authority. It is not a currency authority.
5. Focus :
(a) Central Bank : The centrak bank focuses on the growth and stability of the economy.
(b) Commercial Bank: A conmercial bank focuses on profit maximisation.
See lessBanking & Monetary Policy
Difference Between the Central Bank and a Commercial Bank 1. Accept Deposit and Lends Money: (a) Central Bank: The central bank is the apex bank (the bank of all banks in the country). It accepts deposits from the commercial banks and advances loans to them. (b) Commercial Bank: A commercial bank isRead more
Difference Between the Central Bank and a Commercial Bank
1. Accept Deposit and Lends Money:
(a) Central Bank: The central bank is the apex bank (the bank of all banks in the country). It accepts deposits from the commercial banks and advances loans to them.
(b) Commercial Bank: A commercial bank is that financial institution which accepts deposits from the general public and offers loans to the people for the purpose of consumption and investment.
2.Supply of Money :
(a) Central Bank: The central bank regulates the supply of money, besides being the principal source of money supply in the economy.
(b) Commercial Bank: A commercial bank only contributes to the supply of money by way of credit creation.
3. Custodian of Forex Reserves:
(a) Central Bank: The central bank is a custodian of forex reserve of the country. It conducts ‘managed floating’ to regulate exchnage rate of the domestic currency.
(b) Commercial Bank: A commercial bank is not a custodian of forex reserves of the country. However, it deals in the sale and purchase of foreign exchange for the purpose of profit only.
4. Note Issuing Authority:
(a) Central Bank: The central bank is a note issuing authority. It is a currency authority of the country.
(b) Commercial Bank: A commercial bank is not a note issuing authority. It is not a currency authority.
5. Focus :
(a) Central Bank : The centrak bank focuses on the growth and stability of the economy.
(b) Commercial Bank: A conmercial bank focuses on profit maximisation.
See less