4.4.3

Question 1

what is a central bank?

Answer 1

major bank in a country responsible for monetary policy and maintaining financial stability

Question 2

what are the 4 main roles of the central bank?

Answer 2

• implementation of monetary policy
• banker to the government
• bank to banks- lender of last resort
• regulating the banking industry

Question 3

what is the lender of last resort function?

Answer 3

providing emergency loans to financial instututions- in times of crisis to prevent collapse

Question 4

how does the central bank act as a banker to the government?

Answer 4

• issuing and selling government bonds on behlaf of government to finance it’s budget and borrow money
• providing financial advice to government