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The central bank of any country is owned by the Government.
The government uses the central bank as a tool to control the economy. When the inflation rate is very high the central bank can raise the rate of interest so that people save more and do not spend . The inflation rate comes down . The central bank with the cash reserve ratio as the main instrument controls the bank interest rate in the country. By increasing the CRR the central bank can force banks to increase the deposit rate. The central bank can also have a say on how much hard foreign currency , gold can be held by the bank. Can also have control over how much and to whom to lend. Which sector to be given preferential loans etc.
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