ROLE OF nasabah CENTRAL BANK asia
KENYATTA UNIVERSITY
SCHOOL
DEPARTMENT
NAME
REGISTRATION
LECTURER
TASK
CENTRAL BANK OF KENYA
DATE SUBMITTED
: ECONOMICS
: APPLIED ECONOMICS
: LAGAT KIPRUTO ISAAC
: K16 /1749/2012
: DR. STEVE MAKORI
: DISCUSS FUNCTIONS OF
: 12TH FEBRUARY 2015
FUNCTIONS OF CENTRAL BANKS OF KENYA
INTRODUCTIONS
Central bank can generally be define as financial institution responsible for
overseeing the monetary system for a nation, or a group of nations, with the goal of
fostering economic growth without inflation. Central bank works as an institution
whose main objective is to control and regulate money supply keeping in view the
welfare of the people. The followings are its functions;
Monopoly of note. This is primarily the main function of central bank. Central
bank controls the issue of notes and coins (legal tender). Usually the central bank
will have a monopoly of the issue although this is not essential as long as the
central bank has power to restrict the amount of private issues of notes and coins.
This function has the following advantages; Central bank controls the credit creating
power of commercial bank, People have more confidence in the currency issued by
the control bank because it has protection and recognition by the government, The
system of note issue has some advantages. If the central bank of a country has the
monopoly of note issue.
2. Lender of the last resort. The central bank should oversee the financial sector
in order to prevent crises and act as a lender of last resort to protect depositors,
prevent widespread panic withdrawal, and otherwise prevent the damage to the
economy caused by the collapse of financial institutions.
3. Credit control. This is the most important functions of central bank as it
controls the volume of credit for bringing about stability in the general price level
and accomplishing various other socio-economic objectives. The central bank has
acquired the rights and powers of controlling entire banking. Central bank can adopt
various quantitative and qualitative methods for credit control such as bank rate,
open market operation, changes in reserve ratio, selective controls and moral
situate
Bankers, Agent and adviser to the government. Central bank holds the
government’s bank account and performs certain traditional banking operations for
the government such as deposits and lending. It also manages government
departmental undertakings and government funds and where there is a need gives
loan to the government. From time to time central bank advices the government on
monetary, banking and financial matters.
Collection of the data. In almost all countries central bank collects statistical
data regularly relating to economic aspects of money, credit, foreign exchange and
banking. From time to time, committees and commission are appointed for studying
various aspects relating to the aforesaid problem.
Central banking in developing countries. Underdeveloped countries lack
capital formation whose main causes are lack of savings and investment, therefore
central bank can chip in and that important role of promoting capital formation
through mobilizing savings and encourage investment.
The central bank also acts as the official agent to the government in
dealing with its gold and foreign exchange matters. The government reserves
of gold and foreign exchange are held at the central bank.
The central bank has power to control the amount of credit-money
created by banks. In other words it has the power to control, by either direct or
indirect means of money supply.
Clearing agent. Central bank is the custodian of the cash reserves of the
commercial banks and therefore acts as the clearing house for these banks. These
services of clearing agent have the following advantages; it keeps the central bank
fully informed about the liquidity position of the commercial banks, it reduces the
withdrawals of cash and these enables the commercial banks to create credit on a
large scale, it economizes the use of cash by banks while settling their claims and
counter-claims.
REFERENCES
1. Black, T. (1981). Money and banking contemporary practices, politics and
issues: Plano, Texas Business Publications.
2. Kamerschen, D, (1984). Money and banking: Cincinnati s. western
publisher company.
3. Luckett, D. (1984). Money and Banking: New York McGraw Hill.
4. Money and banking in kenya.(1972)Nairobi: central bank of Kenya
SCHOOL
DEPARTMENT
NAME
REGISTRATION
LECTURER
TASK
CENTRAL BANK OF KENYA
DATE SUBMITTED
: ECONOMICS
: APPLIED ECONOMICS
: LAGAT KIPRUTO ISAAC
: K16 /1749/2012
: DR. STEVE MAKORI
: DISCUSS FUNCTIONS OF
: 12TH FEBRUARY 2015
FUNCTIONS OF CENTRAL BANKS OF KENYA
INTRODUCTIONS
Central bank can generally be define as financial institution responsible for
overseeing the monetary system for a nation, or a group of nations, with the goal of
fostering economic growth without inflation. Central bank works as an institution
whose main objective is to control and regulate money supply keeping in view the
welfare of the people. The followings are its functions;
Monopoly of note. This is primarily the main function of central bank. Central
bank controls the issue of notes and coins (legal tender). Usually the central bank
will have a monopoly of the issue although this is not essential as long as the
central bank has power to restrict the amount of private issues of notes and coins.
This function has the following advantages; Central bank controls the credit creating
power of commercial bank, People have more confidence in the currency issued by
the control bank because it has protection and recognition by the government, The
system of note issue has some advantages. If the central bank of a country has the
monopoly of note issue.
2. Lender of the last resort. The central bank should oversee the financial sector
in order to prevent crises and act as a lender of last resort to protect depositors,
prevent widespread panic withdrawal, and otherwise prevent the damage to the
economy caused by the collapse of financial institutions.
3. Credit control. This is the most important functions of central bank as it
controls the volume of credit for bringing about stability in the general price level
and accomplishing various other socio-economic objectives. The central bank has
acquired the rights and powers of controlling entire banking. Central bank can adopt
various quantitative and qualitative methods for credit control such as bank rate,
open market operation, changes in reserve ratio, selective controls and moral
situate
Bankers, Agent and adviser to the government. Central bank holds the
government’s bank account and performs certain traditional banking operations for
the government such as deposits and lending. It also manages government
departmental undertakings and government funds and where there is a need gives
loan to the government. From time to time central bank advices the government on
monetary, banking and financial matters.
Collection of the data. In almost all countries central bank collects statistical
data regularly relating to economic aspects of money, credit, foreign exchange and
banking. From time to time, committees and commission are appointed for studying
various aspects relating to the aforesaid problem.
Central banking in developing countries. Underdeveloped countries lack
capital formation whose main causes are lack of savings and investment, therefore
central bank can chip in and that important role of promoting capital formation
through mobilizing savings and encourage investment.
The central bank also acts as the official agent to the government in
dealing with its gold and foreign exchange matters. The government reserves
of gold and foreign exchange are held at the central bank.
The central bank has power to control the amount of credit-money
created by banks. In other words it has the power to control, by either direct or
indirect means of money supply.
Clearing agent. Central bank is the custodian of the cash reserves of the
commercial banks and therefore acts as the clearing house for these banks. These
services of clearing agent have the following advantages; it keeps the central bank
fully informed about the liquidity position of the commercial banks, it reduces the
withdrawals of cash and these enables the commercial banks to create credit on a
large scale, it economizes the use of cash by banks while settling their claims and
counter-claims.
REFERENCES
1. Black, T. (1981). Money and banking contemporary practices, politics and
issues: Plano, Texas Business Publications.
2. Kamerschen, D, (1984). Money and banking: Cincinnati s. western
publisher company.
3. Luckett, D. (1984). Money and Banking: New York McGraw Hill.
4. Money and banking in kenya.(1972)Nairobi: central bank of Kenya