In: Economics
What role does the Reserve Bank of Australia (RBA) have in the economy? Explain what open market operations are.
Reserve Bank of Australia was functioned on the basis of the
Reserve Bank Act in 1959. They maintain the stability of currency,
full level of employment and economic prosperity among the
Australian welfare of the people. Promotion of overall stability of
the economy is considered as the major role of RBA. Proper
management and providing liquidity among the institutions and the
regulation of the payment system are also under consideration. The
monetary policy was effectively managed and functioned by the
central bank of Australia. The efficient payment system directed to
a great advantage among the people in Australia. The promotion of
competition in the market for payment services ensures the
stability of financial system.
Open market operations are the activities done by central bank to
ensure liquidity of the currency in the economy. This can be used
as a regulator to control the money supply in an economy. There is
an exchange of government securities and treasury bills were run
here. For example, the RBA wish to buy more securities from the
commercial bank, to make a control over the money supply and to
regulate the inflation in the economy.