The central bank sometimes calls for special deposits from the commercial banks in order to
Answer Details
The central bank sometimes calls for special deposits from the commercial banks in order to reduce bank lending.
A special deposit is a monetary tool used by the central bank to control the amount of money in circulation. When the central bank calls for special deposits, it requires commercial banks to deposit a certain amount of money with the central bank. This reduces the amount of money that commercial banks have available for lending to their customers. As a result, the banks are less able to offer loans to businesses and individuals, which can help to reduce inflation and stabilize the economy.
In summary, the central bank calls for special deposits from commercial banks to reduce bank lending and control the amount of money in circulation. This helps to stabilize the economy and reduce inflation.