<P> Through open market operations, a central bank influences the money supply in an economy . Each time it 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 money supply while lowering the supply of the specific security . Conversely, selling of securities by the central bank reduces the money supply . </P> <P> Open market operations usually take the form of: </P> <Ul> <Li> Buying or selling securities ("direct operations") to achieve an interest rate target in the interbank market . </Li> <Li> Temporary lending of money for collateral securities ("Reverse Operations" or "repurchase operations", otherwise known as the "repo" market). These operations are carried out on a regular basis, where fixed maturity loans (of one week and one month for the ECB) are auctioned off . </Li> <Li> Foreign exchange operations such as foreign exchange swaps . </Li> </Ul> <Li> Buying or selling securities ("direct operations") to achieve an interest rate target in the interbank market . </Li>

Central european country called the savings bank of the world