What is Open Market Operations?


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According to the RBI act 17 RBI has right to achieve the objective of monetary policy.  It can self and pure less the first class certificate. It included government securities mainly.  During the period of expansion, the central banks sell the government bonds and securities to the public.  The rate of securities deposited their prices on one hand and result in withdrawal of money from the public.  If government securities are purchased through the transfer of bank deposits to central bank account, it reduce the credit capacity of commercial banks.  During the period of depression the RBI says the government securities so that money safety in economy can rise.  In this way government control over the money.

 


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