Which one of the following activities of the Reserve Bank of India is considered to be part of ‘sterilization?
(a) Conducting ‘Open Market Operations’
(b) Oversight of settlement and payment systems
(c) Debt and cash management for the Central and State Governments
(d) Regulating the functions of Non- banking Financial Institutions
ANS .A
- Sterilization most frequently involves the purchase or sale of financial assets by a central bank and is designed to offset the effect of foreign exchange intervention.
- Sterilized interventions involve the sale or purchase of foreign currency assets and an open market operation involving the purchase or sale of government
