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"What are the pros and cons of having the central bank playing a key role in...

"What are the pros and cons of having the central bank playing a key role in the supervision of major financial institutions?"

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Answer #1

1- Advantages of central bank:

(1) Key controller of banking policies and practices

(2) Keep watch on monetary conditions of the country

(3) Ensures the money and credit supply

(4) Regulator and supervisor of banks and financial institutions

(5) Works on the end of central or state government

Disadvantages :

(1) It may interfere in the working of banks and their autonomy may be foregone

(2) May interfere in setting up the interest rate and affect the free determination of interest rates on borrowing

(3) May have a influence on foreign exchange rate

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