The State Bank of Pakistan is the premier banking organization of the country. It is the central bank of Pakistan that has the authority of controlling the operations of all the banks. It was formed right after the independence of Pakistan, in the year 1947.
The main function of the State Bank of Pakistan, as the central bank, is to control the money supply in the country. This is done by appropriate issuance of notes, supervision and regulation of the entire financial system, foreign exchange management, etc.
It controls the money supply by controlling the interest rates in the country. With more interest rates, people would invest more in banks for the purpose of getting high returns. So in turn government would get more money also.
