UPSC Prelims 2022 Guidance UPSC Prelims Notes CSE IAS IPS IFS IFoS Toppers Strategy

✅ Open Market Operation (OMO) means buying and selling of government securities in the open market by the central bank of a country (RBI in India).

•When the central bank wants to infuse liquidity into the monetary system, it will buy government securities in the open market. This way it provides commercial banks with liquidity.

•In contrast, when it sells securities, it curbs liquidity.

• Thus, the central bank indirectly controls the money supply and influences short-term interest rates.

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3.6K viewsFeb 17, 2022 at 18:47

✅ Open Market Operation (OMO) means buying and selling of government securities in the open market by the central bank of a country (RBI in India).

•When the central bank wants to infuse liquidity into the monetary system, it will buy government securities in the open market. This way it provides commercial banks with liquidity.

•In contrast, when it sells securities, it curbs liquidity.

• Thus, the central bank indirectly controls the money supply and influences short-term interest rates.

BY UPSC Prelims 2022 Guidance UPSC Prelims Notes CSE IAS IPS IFS IFoS Toppers Strategy