Commercial banks settle their inter-bank indebtedness through

Assessment: WAEC SSCE - Economics - 2000 (Objective) Subject: Economics

Question 1 Report

Commercial banks settle their inter-bank indebtedness through
Answer Details
Commercial banks settle their inter-bank indebtedness through **central banks**. When one commercial bank needs to settle an obligation to another bank, it may not necessarily have cash reserves in the other bank. In such a situation, the banks can go through the central bank, which acts as an intermediary to settle the inter-bank transactions. The central bank facilitates the transfer of funds between the banks, making sure that the payment obligations of each bank are met.
Read lesson note on Banking (JAMB)
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