Question

What are the major similarities and major differences between the direct and indirect channels of monetary policy?

Answer 1

The immediate channels of financial strategy are Cash hold proportion (CRR), statuary liquidity proportion (SLR), repo rate and invert repo rate.

The aberrant channels of money related strategy are OMO (open market tasks).

The similarities between direct and indirect channels of monetary policy are that they both tend to increase or decrease the money supply in the economy whenever the situation demands. Also both are exercised by the central bank of the country.

the contrasts between the immediate and roundabout channels of financial arrangement are that through direct channels national bank tends to increment or reduction the cash supply by managing the stores of the banks and their influence to advance the speculations, while through backhanded channels national bank straightforwardly offer or purchase the administration securities in the currency market to decline or increment the cash supply in the economy individually.