Instruments (Tools) of the monetary policy

These are guide lines/instruments used by the central government through the central bank to regulate the amount of money in circulation, availability of credit and interest rate in order to regulate economic activity in the country.

They include

• open market operation
• bank rate
• selective credit control
• legal reserve requirement
• rationing of credit
• moral suasion
• compulsory deposit/special deposits
• currency reforms
• The Bank rate policy.
• Margin requirement.