Frequently used monetary policy tools: deposit reserve policy/rediscount policy and open market operations

⑴ Statutory deposit reserve ratio: refers to the legal provisions for commercial banks and other financial institutions The rate at which a portion of the deposits it receives is turned over to the central bank as reserves. Effect: ① Even if the adjustment of the reserve ratio is small, it will cause huge fluctuations in the money supply; ② Other monetary policy tools are based on deposit reserves; ③ Even if commercial banks and other financial institutions hold excess reserves due to various reasons Adjustments to statutory deposit reserves will also have an effect; ④ Even if deposit reserves remain unchanged, it will largely limit the ability of the commercial banking system to create derivative deposits. Limitations: ① The effect of adjustments to the statutory deposit reserve ratio is relatively strong, causing it to become fixed; ② The impact of deposit reserves on various types of financial institutions and different types of deposits is inconsistent, so the effect of monetary policy may vary depending on These complex situations exist and are difficult to grasp.

⑵ Rediscount policy: refers to the policies and regulations made by the central bank when commercial banks apply to the central bank for rediscounting undue bills held by them. It includes two aspects: first, the determination and adjustment of the temporary rediscount rate; second, it stipulates the qualifications for applying to the central bank for rediscount. Effects: ① Adjustment of the rediscount rate can change the total money supply; ② Regulations on rediscount qualifications can inhibit or support, and can change the flow of funds. Limitations: ① The initiative does not only lie with the central bank, and market changes may even go against its policy wishes; ② The regulatory effect of the rediscount rate is limited; ③ The rediscount rate is easy to adjust, but adjustments at any time cause frequent fluctuations in market interest rates , leaving commercial banks at a loss.

⑶ Open market business: refers to the policy behavior of the central bank to openly buy and sell securities in the financial market to regulate the amount of money in the market. Effects: ① Strong initiative, it can proactively operate according to policy purposes; ② High flexibility, the quantity and direction of transactions can be flexibly controlled; ③ The regulatory effect is gentle and the shock is small; ④ The scope of influence is wide. Limitations: ① The central bank must have financial strength strong enough to intervene and control the entire financial market; ② There must be a developed and complete financial market, and the market must be nationwide, with a complete range of securities on the market and reaching a certain scale ; ③ It must be coordinated with other policy tools.