Why does a central bank regulate credit?

A central bank regulates credit to ensure financial stability and promote sustainable economic growth. By controlling the supply of money and credit, it can influence interest rates, manage inflation, and mitigate risks in the banking system. This regulation helps prevent excessive lending and borrowing that could lead to economic bubbles or crises, ultimately safeguarding the overall economy. Additionally, it aims to maintain public confidence in the financial system and protect consumers from predatory lending practices.