The Central Bank's monetary policy instrument by which it buys and sells treasury bills is known as
Answer Details
The Central Bank's monetary policy instrument by which it buys and sells treasury bills is known as Open Market Operations. Open Market Operations (OMO) is a monetary policy tool used by the central bank to manage the money supply in the economy. It involves the buying and selling of government securities, such as treasury bills and bonds, in the open market. When the central bank buys these securities, it injects money into the economy, which can stimulate economic growth. Conversely, when it sells these securities, it withdraws money from the economy, which can slow down inflation. OMO is a flexible tool that can be used to implement various monetary policy objectives, such as controlling inflation, stabilizing interest rates, and promoting economic growth. It is a key mechanism through which the central bank can influence the supply of money in the economy and maintain stability in the financial system.