structural:expansion, structural:scholar_edition, stylistic:tone, linguistic:paraphrasing
Open market operations

Through open market operations, a central bank may influence the level of interest rates, the exchange rate and/or the money supply in an economy. Open market operations can influence interest rates by expanding or contracting the monetary base, which consists of currency in circulation and banks' reserves on deposit at the central bank. Each time a central bank buys securities (such as a government bond or treasury bill), it in effect creates money. The central bank exchanges money for the security, increasing the monetary base while lowering the supply of the specific security. Conversely, selling of securities by the central bank reduces the monetary base.