Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsMoney and Banking2 Marks
Question
Explain issue of currency function of Central Bank.
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Answer
The central bank has the sole monopoly to issue currency notes. Commercial banks cannot issue currency notes. Currency notes issued by the central bank are the legal tender money.
Legal tender money is one, which every individual is bound to accept by law in exchange for goods and services and in the discharge of debts.
Central bank has an issue department, which is solely responsible for the issue of notes.
However, the monopoly of central bank to issue the currency notes may be partial in certain countries.
For example, in India, one rupee notes and all coins are issued by the government and all other notes are issued by the Reserve Bank of India.
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