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Chapter 3
Central Bank
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Central Bank
Definition: An institution which is charged with the responsibility of managing the expansion & contraction of the volume of money in the interest of the general public welfare. the guiding principle of a central bank is that it should act only in the public interest for the welfare of the country as a whole & with out regard to profits as a primary consideration.
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Primary Functions
Secondary Functions
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Traditional Functions : Which are generally performed by central banks all over the world, are classified into two groups;
Primary Functions: including issue of notes, regulation of financial system, and conduct of monetary policy Secondary Functions: including management of public debt, management of foreign exchange, advising the government on policy matters, and maintaining close relationships with the international financial institutions
Non-Traditional Functions: these functions are performed by the State Bank include development of financial frame work, provision of training facilities to bankers, and provision of credit to priority sectors.
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Primary Functions
Banking Department
Conduct of monitory policy & credit policy Supervision of financial system Bankers Bank
Services to the scheduled banks
Reserves of scheduled banks Demand & time liabilities of scheduled banks Excess reserves Clearing House Remittance Facility at concessional rates
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Secondary Functions
Advisor to Government
Help in monetary policy, Economic & Foreign exchange policy, fiscal policy (imports & exports)
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Non-Traditional Functions
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Accounts Department provide effective & efficient services & information for planning, control and decision making regarding annual budget It undertakes the sale & purchase of foreign currencies Agricultural Credit Department (ACD) ACD coordinate the operations of the bank in connection with the agriculture credit and its relations with the provisional co-operative banks & any other organizations engaged in the business of agricultural credit. Banking Inspection Department Insuring the safety and soundness of the financial system and safeguards the interest of the depositors. To asses a financial institutions , BID conduct regular onsite inspection of all scheduled banks
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Exchange & Debt Management Department Its function is effective and efficient execution of monetary and exchange rate policies through money market and foreign exchange operations. It also perform domestic debt management. Islamic Banking Department All matters relating to Islamic banking in the country Payment System Department It is setup recently to oversee the existing payment and settlement in place an develop a strategy with the banking industry for improvement in the banking system.
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Research Department Makes objective analyses of economic development , explore inter-linkages between macroeconomic policies, and examine their relationship with overall economic growth It also prepares annual and quarterly reports on the status of the economy Statistics Department The department is responsible for collection, compilation, dissemination and publication of statistics on economic, financial and monetary aspects most pertinent Human Resource Department Its objective is excellent at acquiring, developing and retaining the right talent for SBP by continuous innovation & improvement of the HR policies & procedures, providing effective facilities and advisory services to line departments and effective and timely delivery of HR services.
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Audit Department It provides independent appraisal of all activities of SBP aiming to add value, improve operational efficiency, risk management & internal control system. Information System Department It is responsible for oversight and management of the technology operations, development and implementation, including all corporate systems, LANs,WANs, databases, websites, system administration and desktop support for the SBP. Corporate & Media Affairs Department
This department is entrusted to arrange Central Board Meetings. It takes care of all the affaires related with board of the bank, acts as spokesman of the bank for media and other external stakeholders, and manage publications of the State Bank of Pakistan.
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