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Open market
In economics, the Open Market is the term used to refer to the environment in which bonds are bought and sold.
To intervene in the "business cycle", a central bank may choose to go into the open market and buy or sell government bonds, which is known as open market operations to increase reserves. Open Market Operations are when the central bank buys bonds from other banks in exchange for cheques. These local banks then cash the cheques, which allow them to take money from the central bank. This action thus decreases any credit the local banks may owe to the central bank, and also increases their money supply. This thus increases reserves.
See also
10-26-2009 08:16:03
The contents of this article is licensed from www.wikipedia.org under the GNU Free Documentation License. Click here to see the transparent copy and copyright details
The contents of this article is licensed from www.wikipedia.org under the GNU Free Documentation License. Click here to see the transparent copy and copyright details