The rationale for the existence of central banks is mainly that:

Question

Quizplus · Accepted Answer

The main rationale for the existence of central banks is to mitigate the risk of financial systems that are prone to periods of extreme volatility. Central banks act as lenders of last resort and can inject liquidity into the system to prevent financial crises. They also regulate and supervise banks to ensure the stability of the financial system. While financial markets may lack transparency at times, this is not the primary reason for the existence of central banks. Financial intermediation can occur without a central bank, although central banks can facilitate the process by providing a stable monetary environment.

The Rationale for the Existence of Central Banks Is Mainly