Distinguishing roles of central vs. commercial banks

Steps:

• Identify core functions: Central banks manage monetary policy; commercial banks handle everyday banking for individuals and businesses.
• Review option A: Central banks control inflation through tools like interest rates.
• Check options B-D: These attribute government fiscal duties to commercial banks, which is incorrect.
• Confirm: Only A matches the central bank's mandate.

Why A is correct:

• Central banks, like the Federal Reserve, regulate inflation via monetary policy laws, targeting stable prices (e.g., 2% inflation goal under mandates like the U.S. Federal Reserve Act).

Why the others are wrong:

• B: Commercial banks serve private clients; government accounts are managed by treasury departments or central banks.
• C: Government's foreign reserves are held by central banks, not commercial ones.
• D: Country's foreign reserves are safeguarded by central banks for national stability.

Final answer: A