What is the difference between a central bank and a commercial bank?

What is the difference between a central bank and a commercial bank Introduction: The Pillars of the Financial System Hello everyone! When it comes to the financial system, two entities play pivotal roles - central banks and commercial banks. While they both operate within the banking sphere, their functions and objectives are distinct. Today, we'll explore these differences and gain a comprehensive understanding of their individual contributions. Let's dive in! Central Bank: The Guardian of the Economy A central bank is the apex monetary authority in a country. Its primary objective is to ensure price stability and maintain a healthy economic environment. It achieves this through various tools, such as setting interest rates, controlling the money supply, and managing foreign exchange reserves. Additionally, central banks act as lenders of last resort, providing liquidity to financial institutions during crises. In essence, they are the custodians of the nation's monetary policy, safeguarding its economic well-being. Commercial Bank: The Facilitator of Financial Transactions