What is the role of central banks in financial markets?

In India, the Reserve Bank of India (RBI) is the central bank, and it plays a crucial role in regulating and supervising financial markets. The RBI's main function is to manage monetary policy, which involves controlling the supply of money and credit in the economy. The central bank also acts as a lender of last resort, providing liquidity to banks and financial institutions during times of financial stress. Additionally, the RBI regulates and supervises banks and other financial institutions, with the aim of ensuring stability in the financial system. The central bank also intervenes in foreign exchange markets to manage the value of the Indian currency. Overall, the RBI's actions can have a significant impact on financial markets and the economy as a whole.