If a central bank uses the tools of monetary policy to reduce the demand for goods and services
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MAS conducts monetary policy based on sound economic analysis and careful surveillance. Find out about our monetary policy framework and central bank operations, and access our statements, reports and models.
OverviewMAS carries out the full range of central banking functions related to formulating and implementing monetary policy. Monetary policy in Singapore is centred on managing the trade-weighted exchange rate with the objective to ensure price stability over the medium term as a basis for sustainable economic growth.
Central Bank OperationsMAS implements monetary policy by undertaking foreign exchange operations to keep the Singapore dollar nominal effective exchange rate within a policy band consistent with ensuring price stability. MAS also conducts money market operations to provide sufficient liquidity for a well-functioning banking system and to meet banks' demand for reserve and settlement balances. Details of MAS’ liquidity management framework are set out in this monograph.
Economics EducationAccess educational materials for students of economics.
ResearchWhich tools of monetary policy can the central bank use to decrease money supply?The Fed can also alter the money supply by changing short-term interest rates. By lowering (or raising) the discount rate that banks pay on short-term loans from the Federal Reserve Bank, the Fed is able to effectively increase (or decrease) the liquidity of money.
What are the monetary policy tools central banks typically use?Central banks have four main monetary policy tools: the reserve requirement, open market operations, the discount rate, and interest on reserves. 1 Most central banks also have a lot more tools at their disposal. Here are the four primary tools and how they work together to sustain healthy economic growth.
What does central bank do to reduce the supply of money in the economy?Central banks conduct monetary policy by adjusting the supply of money, generally through open market operations. For instance, a central bank may reduce the amount of money by selling government bonds under a “sale and repurchase” agreement, thereby taking in money from commercial banks.
What are the 3 main tools of monetary policy?The Fed has traditionally used three tools to conduct monetary policy: reserve requirements, the discount rate, and open market operations.
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