Question

Explain the meaning of open market operations. How does the central bank use it for controlling credit

creation by commercial banks?​

Answer 1

Answer:

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Open Market Operations refer to the buying and selling of securities either to the public or to the commercial banks in an open market. ... The selling of securities by RBI will wipe out the extra cash balance from the economy, thereby limiting the money supply resulting in controlled credit creation.

Answer 2

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Explanation:

Open Market Operations refer to the buying and selling of securities either to the public or to the commercial banks in an open market. ... The selling of securities by RBI will wipe out the extra cash balance from the economy, thereby limiting the money supply resulting in controlled credit creation.