(i) Bank of Issue: Refers to the legal right to issue currency. The Central Bank enjoys complete monopoly of note issue. This brings about uniformity in note circulation. At the same time, it gives the Central Bank power to influence money supply because currency with public is a part of money supply.
(ii) Banker’s Bank: Commercial Banks have to keep a certain percentage of its deposits as cash reserves with the Central Bank. The Central Bank uses these reserves to meet the emergency cash needs of the Commercial Banks. The Central Banks in this way gives loans to these banks. It makes the Central Bank the banker’s bank.
