The central bank of a country is the sole note issue authority. In India, RBI as the central bank issues the notes of all denominations of the country except One Rupee note which is issued by the Ministry of Finance, Government of India. According to De Kock, the main reasons for grasons for granting power of issuing motes to central bank are:
(i) To maintain similarity in notes circulation and better regulation of currency
(ii) To grant ditinctive prestige to currency notes
(iii) To avoid unnecessary credit creation by the commercial bank
(iv) To make government inpection on issuing note effective.

Money can be defined as a generally acceptable medium that can be exchanged for goods and services, and can be used as a measure and store of value.
Money as a Medium of exchange: Money acts as an intermediary in the exchange transactions of goods and services. Money solves the problem of double coincidence of wants by acting as a  medium if exchange for all goods and services. For example, if a vegetable grocer wants a cart but the cart manufacture want clothes, and not vegetables, then the grocer can use money to buy a cart. Similarly, the cart manufacturer can then use the money to buy clothes. Thus, everyone's wants can be satisfied as money acts as a medium of exchange. Money is also called a bearer of options or generalised purchasing power. This indicates the freedom of choice that the use of money offers. This function can only be performed properly if the value of money remains constant.

The functions of a commercial bank are classified below:
I. Primary Functions: Following are the primary functions of a commercial bank:
(i) Acceptance Deposits: Commercial banks accept deposits from the public and lend this money to companies and other people for investment projects. The banks offer interests on deposits to the deposit holders. Deposits are broadly into:
(a) Demand Deposits: These are, payable by the banks on demand from the account holder. For example: Current and Savings Account Deposits.
(b) Time Deposits: These deposits have a fixed to maturity. For example: Fixed Deposits.
(ii) Advancing Loans: Extending loans is another important primary function of the commercial banks. After keeping a certain portion of the deposits as reserves, the bank gives the balance to borrowers in the form of loans and advances. The rate at which banks lend out their reserve to investors is called the lending rate. Lending by commercial banks consists mainly of cash credit, demand and short-term loans to private investors and banks. The Credit-worthiness of a person is judged by his current assets or the collateral he can offer.
II. Secondary Functions: Following are the secondary functions of a commercial bank:
(i) To transfer funds from one place to another.
(ii) To collect funds on behalf of the customers.
(iii) To purchase and sell shares and debentures on behalf of the customers.
(iv) To provide income-tax consultancy.
(v) To pay bills and insurance premium as per customer's direction.
(vi) To provide facility of traveller's cheque and letter of credit.

The following are the important functions of money:
(i) Medium of Exchange: Money acts as an intermediary in the exchange transactions of goods and services. Money solves the problem of double coincidence of wants by acting as a medium of exchange for all goods and services.
(ii) Unit of Value:  Money acts as a convenient unit of account. The value of all the goods and services can be expressed in monetary units. Money as a unit of value helps in measuring the value of exchange for various goods and services.
(iii) Store of  Value:  Money is not a perishable item and its storage cost are also considerably low. Moreover, it is acceptable to anyone at any point of time. Thus, money acts as a store of value for individuals. Under barter system, wealth in the form of goods like wheat, rice, cattle, etc. deteriorate with the passage of time or involve heavy storage cost. However, wealth can easily be stored in the form of money for future use.
(iv) Standard of Deferred Payments:   Money acts as standard in terms of which future or deferred payments are stated because money maintains a constant value over a period of time. Under barter system, goods could not be used for future contracts due to the risk associated with type, quality and value of the goods. Money exchange has no such problem.

Excves money supply leads to a situatin of inflation. Two meaures to control inflation are:
1. Increae tax rate
2. Reduce public expenditure

Following are the point of distinguish between a commercial bank and a central bank:

Central bank act as banker to all other banks in the country just as commercial banks act as banker to general bank public. It performs following function:
(i) Making policies and regulation for commercial banks.
(ii) Maintaining cash reserve as deposit by the commercial banks.
(iii) Providing finicial asistance to commercal banks during crisis.

The bank rate is the minimum rate at which the central bank discounts the first class bills of exchange and provides credit to the commercial banks.
Increase in the bank rate makes the borrowing from the central bank costlier than before. This reduces the lending or credit creation capacity of the commercial banks as they get funds at a higher interest rate from the central bank. Increase in bank rate also increases the rate at which commercial banks lends to the general public. Consequently, credit contracts in the economy.

Thre following are the main components of money supply:
(i) Currency: Currency is the main component of money. Currency consists of coins and notes.
(ii) Demand Deposits: Demand deposits are also an important component of money supply. These are payable by the banks on demand from the account holder. For example: Current and Saving Account Deposits.
(iii) Time Deposits: These deposits have a fixed period to maturity. For example: Fixed Deposits.

Transaction demand for money is a measure of the money held by the public to carry out ordinary day to day transactions.
Speculative demand for money, on the other hand, is a measure of the money held by the public to meet unexpected expenditures or emergencies in future.

Barter is a system of exchange in which goods and services are directly trade for other goods and services without the mediation of money.
Money as a Standard of Deferred Payment: Deferred payments refer to those payments, which are made at some specific time in future. Money acts as standard in terms of which future or deferred payments are stated because money maintains a constant value over a period of time. Under barter system, goods could not be used for further constants due to the risk associated with type, quality and value of the goods. Money exchange has no such problem.

Money can be defined as a generally acceptable medium that can be exchanged for goods and services, and can be used as a measure and store of value.
The following are the important functions of money:
(i) Medium of Exchange: Money acts as an intermediary in the exchange transactions of goods and services. Money solves the problem of double coincidence of wants by acting as a medium of exchange for all goods and services.
(ii) Unit of value: Money acts as a convenient unit of account. The value of all the goods and services can be exchange for various goods and services.
(iii) Store of Value: Money is not a perishable item and its storage costs are also considerable low. Moreover, it is acceptable to anyone at any point of time. Thus, money acts as a store of value for individuals.
(iv) Standard of Deferred Payments: Money acts as standard in terms of which future or deferred payments are stated because money maintains a constant value over a period of time.