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Central Bank
- Enjoys supreme monetary authority with wide powers.
- It does not exist to make profits for its for owners.
- It is the ultimate source of money supply to the economy.
- It acts as a banker to the government.
- It is the lender of last resort and hence never fails.
- It neither does accept deposits from public, nor lends money to the public.
- It is generally subordinate to the state, i.e. state owned and state managed.
- It issues paper notes in fact it enjoys the monopoly power in this matter.
- The basis of cash money issued is gold and foreign reserve.
Commercial Bank
- No authority, hence no such power is enjoyed.
- It exists and is organized for profits their owners.
- No such function is performed by it.
- It acts as a banker to private industries and institutions.
- It often undertakes risky business activities and sometimes may fail.
- Accepting deposits and lending money to the public are the most important functions of commercial banks.
- It is mostly privately owned and privately managed.
- Its nature operation is credit creation and cannot issue paper notes.
- The basis of credit money generated is cash deposit.