Open market operation
open market operation
Position : monetary management >> open market operation
Open market operation instruments include government securities, and negotiable certificates of deposit (NCDs) issued by the Bank. The Bank can issue or sell those instruments either on an outright basis or under repurchase aggrements to mop up excess liquidity. Conversely, it can purchase those securities to release funds into the market.
The Bank introduced a designated counterparty system to strengthen the efficiency of open market operations. Currently, there are 21 commercial banks and bills finance companies designated as the counterparties of market operations. They are obliged to provide useful and timely market information for the Bank.