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How does open market operations help …

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How does open market operations help Central Bank in controlling credit creation by commercial banks?
  • 1 answers

Yogita Ingle 5 years, 9 months ago

Open market operations refer to the sale and purchase of government securities and bonds by the Central Bank. While controlling inflation, the Central Bank sells government securities to the public through the banks. This results in the transfer of a part of bank deposits to the Central Bank account and reduces credit creation capacity of commercial banks.

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