Central bank is the guardian of all the commercial banks operates in any country. Following are basic characteristics of a conventional central bank:
n1. Single Organization: Central bank of a country must be single and unique . It is the supreme institution to monitor the bank system.
n2. Legal Entity: Central bank is formed by separate ordinance of any country where that is not applicable for other bank . So central bank enjoys the legal entity then other bank.
n3. Institution of public welfare: Central bank is non-profitable and public welfare organization . It is not practices any traditional banking activities . the main goal is to keep monetary system stable.
n4. Note Issue: Central banks is only institution is issue paper currency in any country. Expect one and two taka note all the currency is issue and printed by Bangladesh bank in our country.
n5. Government’s bank: Central bank work as a bank of government . It grants credit to the government from its fund with interest. It completes transaction of govt.
n6. Controller and supervisor of all banks: Central bank not practices any commercial banking activities. It work as the controller and supervisor of other bank. It formulate various policies for stabilize better monetary system, the commercial bank have to follow that rules. All the commercial bank has to keep statutory deposit amount central bank.
7. Lender of last resort: If any commercial bank face liquidity crisis, and not get money from any sources, they can got money from central bank. V for this reason central bank is called as leader of last resource.
8. Work in a clearing house: Central bank works as a clearing house of all commercial bank operates in a country. It settles the transactions made by individual bank with another bank. The place where there is no branch of Bangladesh bank, sonali bank ltd carries out the responsibility of clearing house.
9. Maintain Reserve: Central Bank maintains foreign currency reserve in any country. As for example we have 11 billion dollar of reserve, that money is maintain by central bank.
n10. Dealer of foreign currency: Central bank is the prime dealer of foreign currency. It received foreign currency and exchanges that with home currency.
n11.Controller of money market: Central bank is the controller of total money market, banking system, monetary system. It formulate various effective rules and made the other bank bond to follow it. It is working hard to stabilize the monetary system and stable supply V money in the economy.