Final answer:
Central banks have taken on the role of creating money due to their independence, ability to respond quickly, and practicality of day-to-day democratic control of monetary policy.
Step-by-step explanation:
A central bank has taken on the role of creating money due to several reasons:
- The independence of the central bank allows its members to make nonpartisan decisions based on economic situations, without political interference that could lead to expanding the money supply and causing rampant inflation.
- Central banks can respond more quickly to economic conditions and implement monetary policies than a legislature, which needs to go through a lengthy legislative process.
- Democratic control of monetary policy on a day-to-day basis is impractical and could result in an overly expansionary monetary policy and higher inflation.
Therefore, central banks have been entrusted with the responsibility of creating money to maintain stability in the economy and prevent inflation.