Central bank is the supreme authority or body which controls and stabilizes the economy of every country through various direct and indirect means. Direct means , it uses the monetary policy as a tool to expand and indirect means it uses tools like issuance of treasury bills, national saving bonds and banks rates etc.

Role of central banks in the economy:

• Control of money supply: The first and most important fucntion of the central bank is control of the money supply. The implication of this study is that , if the central bank can control bank can control the rate of growth money, it can influence the growth rate of the economy as a whole.
• Stabilizing the money and capital markets: The financial system must transmit saving to those who require funds for investment so the economy can grow.
• Lender of last resort: This means providing liquid funds to those financial institutions in need, especially when alternative sources of funds have dried up.
• Maintaining and improving the payment mechanism: This involves clearing checks, providing an adequate supply of currency and coin, wring funds and preserving confidence in the value of the fundamental monetary unit.