Discuss any one of the following functions of a central bank:
a) As government’s bank b) Open market operations.

Explanation

Central Bank as government's bank - The Central Bank acts as a banker to both central as well as state governments. The Central Bank accepts receipts and makes payments for the government and carries out exchange, remittance and other banking operations. It advances creditloan to the government to meet its reuirements in case of crisis. It also acts as an agent to buy and sell government securities advises the government on various financial matters.
Open Market Operations refers to buying and selling of government securities (bonds) by the Central Bank fromto the general public. It is an important step which may be undertaken to control money supply in the economy. The Central Bank may sell government securities to reduce the money supply in the hands of general public and vice-versa.