The purpose of the OMO is to implement the monetary policies that were made on the FOMC. There are different types of OMOs, the most commonly used are: triparty, repos and securities purchases. The OMO enable the Fed to affect the supply of reserve balance in the banking system and this way influence short-term interest rates and other monetary policy targets. Also the OMO through the Fed can influence the level of reserve balances by either reinvesting the proceeds of maturing securities in the System of OMO into new securities or redeeming maturing …show more content…
The Fed literally make or print new money to increase the money supply. With the money that creates, the Fed buy government bonds from the public’s in the nation’s bond markets. This means the Federal Reserve Bank of New York (“the Desk”) executes open market operations on behalf of the entire Fed. This is the way which the money is put in the hands of the public, and the purpose of increase the money supply is done. If the purpose is decrees the money supply, so the Fed sells governments bonds to the public in the nation’s bond markets. Now the money is in the Fed reserve and the money supply decreases. The securities purchased through these operations are lent on a daily basis through the securities lending program, and are managed in a portfolio known as the System Open Market Account. The documents where the transactions are registered should have content information regulated for the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and are: “Detailed data on open market, securities lending and foreign currency transactions-including, for each transaction, the date, amount, counterparty, price or interest rate paid or received, and the type and value of collateral or asset transferred”.