Answers

Jatin Kumar
Aug 1, 2020

The Central Bank is obliged to back the currency with assets of equal value. These assets usually consist of gold coin, gold bullion, foreign securities and the domestic  government’s local currency securities. The country’s Central government is usually authorised to borrow money from the central bank. Government does this, by selling  local currency securities to the central bank. When the central bank acquires these securities, it issues currency. Putting and withdrawing currency into and from  circulation is also the job of the central bank.