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Identify ways a commercial bank differs from a central bank.

Quick Answer:

▶ Features of a central bank include:

- owned by the government
-the objective is to create price stability
- only one in a country issues notes and coins
-operates monetary policy/sets the rate of interest (base rate)
-intervenes in foreign exchange markets to influence the exchange rate
-lender of last resort to governments
-owned by the government
- supervises and regulates the financial system

▶ Features of a commercial bank include:

- owned by shareholders/privately owned
-the objective is to make a profit
- there are usually many commercial banks in a country
-exchanges foreign currency
-accepts deposits from households and firms
-lends to households and firms
- provides insurance services to households and firms

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