Known as the three traditional treasures of China's monetary policy policy tools are

1. The three major monetary policy tools are legal reserve policy, rediscount policy and open market policy. Open market operations is the central bank through the sale and purchase of valuable securities to regulate the money supply. There are three kinds of bond transactions in the open market business: repurchase, spot bond transactions and the issuance of central bank notes. Specific methods of operation:

(1) deposit reserve system, refers to the bank central financial institutions to ensure that customers withdraw deposits and funds clearing the deposit prepared. Bank central bank required deposit reserve ratio is the deposit reserve ratio. Characteristics: First, the effect is too large; second, its policy effect is largely affected by the commercial banks excess deposit reserves.

(2) rediscounting policy, redistribution refers to the commercial banks or other financial institutions through the discounting of the outstanding notes obtained by the transfer to the bank, the central. For banks, central, rediscounting refers to the purchase of commercial banks, held notes, outflow of real money and expand the money supply.

For commercial banks, rediscounting is the sale of discounted notes, to solve the temporary shortage of funds the whole process of rediscounting, in fact, is the commercial banks and banks between the middle of the sale of notes and the transfer of funds process. Characteristics: 1. The main advantage of the rediscounting business is conducive to the central bank to play the role of lender of last resort, and can regulate the total amount and structure of the money supply.

(3) the open market business, the open market business refers to the central bank through the purchase or sale of valuable securities that absorb base money, currency to adjust the money supply activities. Unlike the general financial institutions to buy and sell securities, the central government of the bank to buy and sell securities is not for profit, but to adjust the money supply. Characteristics: First, the central bank can operate in a timely manner, buying and selling valuable securities of any size, and accurately controlling the banking system's reserve currency and base currency at a reasonable level. Secondly, there is no "notice effect" in open market operations, which will not cause misunderstanding and confusion. Third, open market operations in the center of the bank, does not determine the yield or other securities, interest rates, and therefore does not directly affect the bank's earnings.