open market operations


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Related to open market operations: Moral Suasion

open market operations

The buying and selling of securities in order to control the money supply. This is normally done by the central bank. If the central bank wants to increase the money supply it will buy securities (in this case pieces of paper carrying the promise to repay the money) from the commercial banks giving the banks extra money. If the central bank wants to decrease the money supply it will sell securities to the commercial banks leaving them with less money.
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The Chinese central bank has said that it has resumed open market operations.
We will consider open market operations if liquidity needs to be injected," he said.
A change to the regular Tuesday Open Market Operation (OMO) to allow all eligible securities (including corporate securities and RMBS) to be acceptable collateral for repurchase transactions of maturity up to three months.
In response, the Desk injected large amounts of reserves, conducting open market operations of which some supplied as much as $50 billion to the system.
The Fed supplies the market with credit through open market operations and, to a much lesser extent historically, through loans to depository institutions at the discount window.
Open market operations and other measures have added greatly to the supply of the monetary base, which jumped from around $850 billion in late August to nearly $1.
If the needs for open market operations continue to decline, at least we may need to make a technical response, which allows the targeted outstanding current account balance to be missed while keeping the target range itself,'' Miyako Suda said in a speech.
government securities that the Federal Reserve has acquired through open market operations.
Federal Reserve Bank monetary policy tools, such as changing re-discount rates, engaging in open market operations, and modifying margin requirements, create obvious market forces that can act out in market value fluctuations.
The FOMC does not directly control the federal funds rate, but through open market operations it can generally keep the funds rate very close to its target.
The prevalent thinking about liquidity traps suggests that the perfect substitutability of money and bonds at a zero short-term nominal interest rate renders open market operations ineffective for achieving macroeconomic stabilization goals.
Thus began what is called open market operations as an instrument of monetary policy.