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    Difference Between Central Bank and Commercial Bank

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    Tannu Gupta
    Central banks are responsible for formulating monetary policy in an economy and regulating money supply, while commercial banks provide financial services like deposits and loans to individuals and businesses. The key differences are that central banks have public ownership, set monetary policy, and are the sole source of money supply, while commercial banks can be public or private, operate for profit, and serve individual and business clients.

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    Difference Between Central Bank and Commercial Bank

    Uploaded by

    Tannu Gupta
    77 views2 pages
    Central banks are responsible for formulating monetary policy in an economy and regulating money supply, while commercial banks provide financial services like deposits and loans to individuals and businesses. The key differences are that central banks have public ownership, set monetary policy, and are the sole source of money supply, while commercial banks can be public or private, operate for profit, and serve individual and business clients.

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    DIFFERENCE BETWEEN CENTRAL BANK AND COMMERCIAL BANK

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    Central banks are responsible for formulating monetary policy in an economy and regulating money supply, while commercial banks provide financial services like deposits and loans to individuals and businesses. The key differences are that central banks have public ownership, set monetary policy, and are the sole source of money supply, while commercial banks can be public or private, operate for profit, and serve individual and business clients.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    77 views2 pages

    Difference Between Central Bank and Commercial Bank

    Uploaded by

    Tannu Gupta
    Central banks are responsible for formulating monetary policy in an economy and regulating money supply, while commercial banks provide financial services like deposits and loans to individuals and businesses. The key differences are that central banks have public ownership, set monetary policy, and are the sole source of money supply, while commercial banks can be public or private, operate for profit, and serve individual and business clients.

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    DIFFERENCE BETWEEN CENTRAL BANK AND

    COMMERCIAL BANK
    There are two types of banks based on the authority; these are
    central banks and commercial banks. Central bank can be called the
    apex bank, which is responsible for formulating the monetary policy
    of an economy.

    Commercial banks, on the other hand, are those banks that help in
    the flow of money in an economy by providing deposit and credit
    facilities. Commercial banks provide financial services to the
    individuals and businesses.

    Let us look at some of the points of difference between the central


    bank and commercial banks.

    Central Bank Commercial Bank

    Definition

    Central bank is the apex financial


    It is a type of financial institution that
    institution of the country that is
    is concerned with providing banking
    concerned with formation of
    services to the general public and
    monetary policies and the way
    businesses by facilitating deposit,
    money should be regulated in the
    offering loan facilities
    economy

    Ownership

    Central bank is always having public Commercial banks can be either


    ownership public or private in their ownership

    Number of Banks

    There is only one central bank in a There can be many commercial banks
    country in a country
    Profit Motive

    Central bank does not operate for Commercial banks operate with the
    making profit motive of earning profit

    Clients

    Commercial banks and the


    Individuals and businesses
    government

    Policy creator

    Central banks create monetary policy Commercial banks do not create any
    to regulate interest rates in an policies that are essential for the
    economy functioning of an economy

    Source of Money Supply

    Commercial banks run on the


    Central banks are the source of deposits obtained from the
    money supply in an economy individuals and hence they perform
    no such function

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