This question was also popular among the candidates and their performance was above average. Candidates were required to define central bank, explain the functions of the central bank and ways in which the central bank controls money supply in the (a), (b) and (c) parts of the question respectively. Majority of the candidates could define central bank but few of them could not adequately expatiate on their points in the (b) and (c) parts of the question. Candidates were expected to answer thus to score maximum marks in this question.

1. A central bank is a government-owned bank responsible for supervising and controlling the monetary and financial system of a country.


2. 1. Lender of last resort.
   
   
   2. Issues a country’s currency.
   
   
   3. Bankers’ bank.
   
   
   4. Adviser and banker to the government.
   
   
   5. Responsible for maintaining stability in the monetary sector.
   
   
   6. Executes external financial business on behalf of government.
   
   
   7. Operates as a clearing house for other banks.
   
   
   
   
3. 1. Open market operations.
      

   2. Bank rate policy.
   
   
   3. Cash ratio/liquidity ratio.
   
   
   4. Special directives.
   
   
   5. Moral suasion.
   
   
   6. Special deposits.