Issuance of Currency. The central bank has the sole authority of issuing the national currency which is allowed in circulation and in the settlement of debts.

Control of Money Supply. The central bank regulates the amount of money in circulation in the country. It controls all the cash in the hands of the general public and the deposits with the commercial banks.

Banker to commercial banks. All commercial banks in the country must have accounts in the central bank. These accounts are used to settle interbank indebtedness through the clearing house.

Replacement of Worn out Banknotes. Bank notes that have deteriorated through wear and tear are withdrawn from the public and destroyed. It is the duty of the central bank to mint and print currency for replacement of the ones which are worn out.

Banker to the government. As a banker to the government, the central bank manages government accounts, receives all revenues and payments (both internal and external) on behalf of the government.

Supervisor of commercial banks. The central bank gives advice to commercial banks concerning their monetary payments. It also requires periodic reports on their activities like on deposits and lending.

Lender of the last resort. The central bank offers advance payment to the government, commercial banks, etc; at short notice.

Keeping the country's gold reserve. All the country's gold reserve has to be kept with the central bank.

Management of foreign exchange operations. The central bank also manages the day-to-day foreign resources say by conducting daily sale and purchase of foreign exchange through money markets

Management of external reserves. It is the responsibility and duty of the central bank to enforce foreign exchange regulations. All foreign exchange proceeds from the export of goods and services in the country should be surrendered to commercial banks and the central bank.

Adviser to the government. The central bank gives advice to the government on matters of economic nature and importance. The bank produces economic reviews periodically, which enlighten the public on the state of the economy.

Banker to international institutions. The central bank maintains close links with other central banks and several international institutions such as the Redcross, World Bank, International Monetary Fund (IMF), African Development Bank (ADB), etc.

Regulating the country's B.O.P position. The central bank also regulates the country's Balance of Payment (B.O.P) position, through management of external debt. The bank handles external payments and receipts on behalf of the government. It also ensures safe limits of borrowing.

Controlling the process of credit creation. The central bank regulates and controls the process of credit creation by commercial banks through its lending policies and interest rates (bank rates) policies extended to commercial banks.

Formulation and execution of monetary policies. This is done in order to stabilise the economy so as to achieve the desirable developmental trends in the country. The above function by the central bank is fulfilled through the management of the domestic monetary system. The central bank manages the domestic monetary system by controlling the amount of money in circulation.

It supervises the banking institutions in its country. The central Bank is in charge of licensing and inspecting the commercial banks and credit institutions.

It creates and controls credit. As a means of controlling credit the bank may:

require that each banking institution maintains a minimum cash reserve balance with it, i.e. special deposits. The Central Bank may also prescribe different ratios for different kinds of liabilities.

prescribe minimum liquid assets which a commercial bank should hold at any time.

indicate the maximum and minimum periods for which loans and advances may be granted and the minimum amount of security (mortgage) required.

prescribe maximum limits on amounts of investments, bans and advances bills and notes discounted by each commercial bank.

prescribe the minimum and/or the maximum rates of interest which the commercial banks may pay on their customers' deposits or charge on loans.