Define or Explain the following concepts. 7. Central Bank as Bank of Issue

Define or Explain the following concepts.

7. Central Bank as Bank of Issue

Answer: 

7. The Central Bank is the sole entity that can print currency notes. In other words, the central bank of a country has the exclusive authority to issue currency (notes and coins). The currency issued by the central bank is known as 'legal tender money' i.e. the value of such currency is backed by the central bank. Since, issuance of notes is exclusively reserved for the Central bank, it is said to be the 'Bank of Issue'.

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