What is the primary function of a central bank?

The primary function of a central bank is to manage a country's monetary and financial institutions, which involves overseeing the overall economy's money supply, interest rates, and financial stability. Central banks control inflation, stabilize the currency, and implement monetary policy to influence economic activities, such as controlling lending rates and maintaining an appropriate level of money circulation in the economy. By doing so, they help to promote sustainable economic growth and employment.

The other options suggest functions that either do not fall under the central bank's purview or are typically handled by different entities. Issuing consumer credit is generally the function of commercial banks rather than a central bank. Regulating stock exchanges usually falls under financial regulatory bodies rather than the central bank, though central banks may have a role in ensuring the overall stability of the financial system. Setting income tax rates is a function performed by governmental tax authorities and is unrelated to a central bank’s responsibility. Thus, the primary role attributed to a central bank is accurately reflected in its management of monetary and financial institutions.