What Is The Difference Between Central Bank And Commercial Bank?

Central Banks

Central banks are government-owned banks that are responsible for controlling the money supply and interest rates in a country. A central bank is the main banking authority in a country and acts as a regulator of other banks. It is the central bank’s job to ensure that the banking system of a country is safe and sound and that there is enough money in circulation to support the economy. The central bank is also responsible for setting interest rates and setting the monetary policy of a country.

Commercial Banks

Commercial banks, on the other hand, are privately-owned banks that provide services to individuals and businesses. Commercial banks provide services such as savings and checking accounts, loans, and investments. Commercial banks are not involved in the regulation of the money supply or interest rates, but they do have an effect on the economy. Commercial banks provide services that help businesses grow and expand, and they also help individuals manage their finances.

Differences Between Central Bank and Commercial Bank

The main difference between a central bank and a commercial bank is that the central bank is responsible for controlling the money supply and interest rates in a country, while commercial banks provide services to individuals and businesses. Central banks are government-owned and have the power to set interest rates and monetary policies, while commercial banks are privately owned and provide services such as savings and checking accounts, loans, and investments. Another difference is that the central bank is responsible for keeping the banking system safe and sound, while commercial banks are not involved in the regulation of the money supply or interest rates.

Conclusion

Central banks and commercial banks are two different types of banking institutions that serve different purposes. Central banks are responsible for controlling the money supply and interest rates in a country, while commercial banks provide services to individuals and businesses. Central banks are government-owned and have the power to set interest rates and monetary policies, while commercial banks are privately owned and provide services such as savings and checking accounts, loans, and investments.