These institutions serve a larger national goal; hence there is need to generate synergies in their activities if the overall national objective is to be achieved. One of the synergies that crucially influences the effectiveness of a central bank’s role in macroeconomic management is its relationship with government. Of necessity, this relationship must be close.
The central bank is “the government’s bank”; the government is typically the largest or only shareholder of the central bank; and central bank functions typically involve providing a range of services to government.