Question

Why is there ambiguity in regard to commercial bank regulation? Whose rules do commercial banks have to follow?

Answer 1

All the commercial banks working in a country come under the supervision of the Central Bank Of the Country. It directs all the banks to follow various rules and regulations and work as per the given criterias.

-The Central Bank is called as Banker's Bank as it regulates all its functioning.

- Known as the lender of laet resort which takes the lead whln a bank becomes bankrupt.

- it controls the credit or the lending rates for commercial banks.

Therefore, all banks are under the direction of commercial banks.

There is ambiguity with regard to commercial bank regulation because the Central bank ia never seen by any. It works as only the supervisor who does not even take any deposit or lend to normal people.