Role of the central bank in developing economies?
The central bank plays an important role in causing an appropriate adjustment between the demand and the supply of money. An imbalance between the two is reflected in the price level. A shortage of money supply will inhibit growth while an excess will lead to inflation. As the economy develops, the demand for money will likely increase due to the gradual monetization of the non-monetized sector and the increase in agricultural and industrial production and prices.
