Q. Consider the following:
Open Market Operations
Liquidity Adjustment Facility
Market Stabilization Scheme
Which among the following is the correct order of their introduction?
Answer: 1 2 3
Notes:
- Open Market Operations - Introduced in 1991 as an instrument of monetary policy. Involves RBI buying/selling government securities.
- Liquidity Adjustment Facility - Introduced in June 2000 to enable smooth transition of the monetary system from deficit to surplus mode. Allows banks to borrow or lend based on needs.
- Market Stabilization Scheme - Introduced in April 2004 to help RBI sterilize capital flows and modulate liquidity conditions. Involves issuance of Treasury bills/dated securities.
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