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

Question

Quizplus · Accepted Answer

The correct rationale for the existence of central banks is that financial markets are prone to periods of extreme volatility. Central banks are responsible for ensuring financial stability by implementing effective monetary policies, regulating financial institutions, and providing emergency liquidity during times of economic uncertainty. Without central banks, financial systems would be more vulnerable to severe shocks and crises. Financial intermediation can still occur without a central bank, but it would be less stable and less efficient. Supervision of banks is one of the key functions of central banks, but it's not the main reason for their existence.

The Rationale for the Existence of Central Banks Is Mainly