ECS3701 Assignment 2 (COMPLETE ANSWERS) Semester 1 2024 (833704) - DUE 29 April 2024;100% TRUSTED workings, explanations and solutions. for assistance Whats-App.......0.6.7..1.7.1..1.7.3.9............ 2.1 Given the global increase in inflation resulting from the Russian invasion of Ukraine, name an...
To decrease inflation resulting from the global increase due to the Russian invasion of
Ukraine, the South African Reserve Bank (SARB) can utilize three conventional monetary
policy tools: open-market operations, accommodation policy, and reserve requirements.
Open-market operations involve the SARB actively maintaining a liquidity requirement by
compelling banks to borrow from the SARB at the repo rate. The SARB constantly drains
excess liquidity from the market by estimating the banks' overall liquidity requirement on a
daily, weekly, and monthly basis. It offers various securities on auction at varying interest
rates, with the aim of forcing a liquidity shortage. The SARB also sells longer-term reverse
repos and conducts outright sales of securities to drain liquidity from the market.
Additionally, it uses foreign exchange swap transactions to temporarily drain rand liquidity
from the market. Another instrument used in open-market operations is the tax and loan
accounts of the government, held with private banks, which serve to alleviate large
fluctuations in liquidity. Terms of use
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