Discussion
Which of these is NOT a monetary policy tool?
Answer: C
Correct answer: Balance Accounts
"Balance accounts" is not a monetary policy instrument, or indeed a recognised term in this context.
The other three are the classical tools of a central bank. The discount rate - the bank rate in Indian usage - is the rate at which the central bank lends to banks. Open market operations buy and sell government securities to change the reserves in the system. Reserve requirements, the cash reserve and statutory liquidity ratios, oblige banks to hold a proportion of deposits in prescribed form.
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