The free-market policy is the most important instrument of the monetary policy - today even standard instrument -, with which the central bank affects the creation of money. It offers certain securities at fixed interest (open market papers) to the business banks for the purchase or buys even securities of the business banks (open market business). If the business banks buy the securities, the money put on is not to them any longer for the granting of credit at the disposal, i.e. the creation of money sinks. If the business banks sell securities, they receive for it to money which they can use for credits. From view of the business banks this corresponds to a security pension business: Securities are given by the business banks with the central bank in "pension". The clearing bank receives in response liquid means in the form of central bank money.

The central bank can operate the policy as quantity politics and as price strategy. With the quantity politics she communicates, which quantity of papers would like to sell her, and the banks make offers. The interest forms at the market, it by the offer is determined, with which the quantity is completely set off. With the price strategy the central bank communicates the interest charges of the open market papers.

Open market business of the EZB

They are the most important instrument of the EZB and form the center of the monetary policy of the ESZB. They serve the cash position for the controlling of the interest, and for pointing the monetary political course out. By the open market business the business banks receive the majority of their money against the from collateral (e.g. Securities). The initiative to open market business goes out with the EZB.

• Main refinancing business (main tenders, weekly, running time one week)
• long-term refinancing business (basis tender, a transaction per month, running time three months)
• Purifying of you operations (Schnelltender)
• structural operations (Schnelltender)

Articles in category "Free-market policy"

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