OPEN MARKET OPERATIONS Definition

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OPEN MARKET OPERATIONS is the purchases and sales of gov­ernment and certain other securities in the open market by the New York Federal Reserve Bank as directed by the Federal Reserve in order to influence the volume of money and credit in the economy. Purchases inject reserves into the depository system and foster expansion in money and credit; sales have the opposite effect. Open market operations are the Federal Reserve's most impor­tant and most flexible monetary policy tool. They are used to promote higher or lower growth in money and credit, and to offset undesirable changes in the reserve positions of depository institutions stemming from movements in currency, float, Treasury deposits and other factors.

Learn new Accounting Terms

OPERATING INTEREST is the legal right to assets used to produce revenue, e.g., produce oil or gas from a well, accompanied by the responsibilities to pay production costs and assume the risks.

UNREALIZED ACCOUNTS RECEIVABLE, in cash based accounting, is monies due but not received; can be used to offset taxes.

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