Commercial vs Central Banks

What is the main role of a central bank?

• To provide banking services directly to individuals

• To regulate the financial system and control the money supply

• To compete with commercial banks for customer deposits

• To sell financial products like insurance and investments

Name two key differences between a central bank and a commercial bank.

• A central bank provides financial services to individuals, while a commercial bank manages a country’s monetary policy.

• A central bank prints and regulates money, while a commercial bank offers loans and savings accounts to the public.

• A central bank offers checking accounts, while a commercial bank only provides loans.

• A central bank is privately owned, while a commercial bank is government-run.

List three services offered by commercial banks.

• Issuing currency, lending money to governments, and setting interest rates

• Printing money, regulating inflation, and controlling exchange rates

• Accepting deposits, providing loans, and offering online banking services

• Managing government finances, selling government bonds, and collecting taxes

What happens if a person tries to withdraw money from a fixed deposit before maturity?

• They will face a penalty or reduced interest for early withdrawal

• They receive the full amount along with the highest interest rate

• They must apply for a special loan to access their funds

• The bank will cancel their account permanently

Why do banks charge interest on loans?

• To discourage people from borrowing money

• To prevent inflation in the economy

• To make a profit and cover the cost of lending money

• To give money back to savers who have deposit accounts