Central banks in emerging market economies, and developing countries ,moved towards reliance on money market operations for the implementation of monetary policy , and thus followed the trend initiated by industrial countries in the 1970s.
This was the counterpart in the monetary area to the trend toward enhancing the role of price signals in the economy.
These money market operations could be operated to provide liquidity or to absorb liquidity from the market. Theoretically there is no difference between conducting operations to provide or absorb liquidity, but in practices the effectiveness of money market operations is most likely to be somewhat limited if the operations are to absorb liquidity.
Page 10
(2) Dealing with structural surplus through operations to withdraw liquidity at the market rates could be considered as a negative incentive for the credit growth.
(3) Structural or systematic operations to absorb liquidity from the market may implicate monetary......
Join Now or Login to view the rest of this paper.
Approximate Word Count: 1154
Approximate Pages: 5 (260 words per double-spaced page) |