An open-market operation is essentially a transaction undertaken by a central bank in the market for securities (or foreign exchange) that has the effect of supplying reserves to, or draining reserves from, the banking system. Open-market operations are one of the several instruments — including lending or discount-window operations and reserve requirements — available to a central bank to affect the cost and availability of bank reserves and hence the amount of money in the economy and, at the margin, credit flows.
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