Central Bank is the sole authority to issue currency in the country. Since no other authority is allowed, this ensures uniformity in issue of currency. Since currency with public is a part of money supply, it gives the Central Bank some control over money supply in the economy.
Detailed Answer:
Central Bank as "Bank of Issue" The Central Bank of a country has the sole authority of issuing currency notes and coins in the country. All the currency issued by the Central Bank are unlimited legal tenders. No other Commercial Bank or financial institution can issue these currency except Central Bank. Often, the Central Bank divides its functions into two departments Banking Department and Issue Department. It is the issue department that is responsible for note-issuing. It issues currency to cope with the demand for it, which depends upon the level of economic activity in the economy. Hence, Central Bank is also known as Bank of Issue.
