Central bank is the main financial institution in any country which is sole and monopoly over the financial matter like issue notes. So it is responsible to expansion and transaction of money in the favor of country. They perform may objective but some are as under:
To control of inflation and deflation
Prices rises inflation value of money falls. So demand and market contract, investment discourages, it badly affects G.N.P, employment export and per capital income saving fall reverses the case in deflation. Both of harmful for the growth of economy
To Increase the rate of economic growths
Central bank expands the credit for development. So it controls the supply of money to check inflation. More credit encourages investment. Hence develops the resources and increases the rate of economic growths. It expands the G.N.P. there is economic welfare.
To achieve full employment level
Employment is the major problems of the third world countries. Therefore Central bank promotes investment. It increases G.N.P. So it crates the jobs for the people. Full employment level is achieve by and by
To stable the price
Resources develop in economic development. G.N.P expands. So it reduces the gap between total demand and total supplies of goods. It let the prices down. So stables the price. The value of money rises.
To Promote Exports
Higher G.N.P and stables prices promote exports. So it increases the foreign exchange and it expands the foreign exchange reserves. It increases the external values of money. The balance of payment improves.