Currency Security Report: Central Bank and Currency Issuance

This report explores the crucial role of central banks in ensuring currency security. It examines the mechanisms of currency issuance, including the maintenance of reserves in the form of foreign exchange and gold, and the management of monetary policy to control the money supply and interest rates. The report highlights how central banks safeguard the value of currency through external value control and by defending the exchange rate, ensuring the integrity of financial institutions. It also discusses the methods used to address budget deficits and prevent counterfeit currency, thereby maintaining the stability and security of a country's legal tender.

Running head: CURRENCY SECURITY
Currency Security
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1CURRENCY SECURITY
The role of central bank in the issuance of currencies
The monetary authority of a country, central bank manages money supply, currency and
interest rate of a country. One of the major role of the central bank is issuance of currency. A
certain amount of reserve in form of foreign exchange and gold is maintained by the central bank
in order to issue currency (Cohen, 2018). Thus, it also plays the role of the custodians of the
foreign exchange. Central bank prevents the currency deterioration by checking the external
value of the domestic currency. Therefore, it ensures the external and internal security of the
currency. In addition, it not only helps in issuance of currency but also protects the value of it.
Central bank maintains the integrity of the financial institution of a country through
defending exchange rate of the currency and ensuring security of the currency. Thus, it helps the
country to have secure control over volume of credit and currency. It is essential to maintain the
security of the currency as it acts as the legal tender money of a country (Lagarde, 2018). To
ensure the security of the currency, a reserve in the form of gold and foreign securities kept
against the currency issued. In order to create a balance between government revue and
government expenditure, new currency are issued through selling of bills to central bank. It is
known as deficit financing or monetisation of budget deficit. It assist government in meeting the
expenditure by spending the new currency and putting it into circulation. Moreover, central bank
also enhances the currency security by adopting various features to control counterfeit currency
in the economy.

2CURRENCY SECURITY
References
Cohen, B. J. (2018). Currency power: Understanding monetary rivalry. Princeton University
Press.
Lagarde, C. (2018). Central banking and fintech: A brave new world. Innovations: Technology,
Governance, Globalization, 12(1-2), 4-8.