BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Commercial bank of that country
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Central Bank of that country
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Central government of that country
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None of the above
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Detailed explanation-1: -The Reserve Bank issues licences to banks and other institutions to act as Authorised Dealers in the foreign exchange market.
Detailed explanation-2: -In brief, official reserves are held for precautionary and transaction motives keeping in view the aggregate of national interests, to achieve balance between demand for and supply of foreign currencies, for intervention, and to preserve confidence in the country’s ability to carry out external transactions.
Detailed explanation-3: -Central banks manage currency by issuing new currency, setting interest rates, and managing foreign currency reserves. Monetary authorities also manage currencies on the open market to weaken or strengthen the exchange rate if the market price rises or falls too rapidly.
Detailed explanation-4: -Definition: Forex reserves are foreign currency assets held by the central banks of countries. Description: These assets include foreign marketable securities, monetary gold, special drawing rights (SDRs) and reserve position in the IMF.
Detailed explanation-5: -All figures are as of June 2022. Note that the above table lists China’s and Hong Kong’s reserves separately. China has by far the largest foreign currency reserves with over two and a half times more than the second-largest reserve holder, Japan.