INTERMEDIATE

Open Market Operations

Open market operations is the primary means by which central banks influence the money stock. When a central bank wants to expand the money stock, it will create new money that it will use to buy assets - usually securities - on the open market. This money is usually deposited in a bank account where it is lent out and reinvested. The process repeats and multiplies the expansion. If the central bank wishes to decrease the money supply, it will sell assets on the open market, and thus decrease the amount of currency in circulation.

Steve Horwitz - Inflation

Kahn AcademyThe Discount Rate: The discount rate and window. Lender of last resort. 

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