(i) Moral persuasion: The Central bank may instruct banks to lend to the specific sectors.
(ii) Raise liquidity ratio: Central bank should raise the cash ratio so as to reduce lending.
(iii) Raising ban rates: This makes borrowing expensive hence reduces money in circulation.
(iv) Increase compulsory deposits: The Central bank authorizes the banks to raise amount of money deposited with central bank. This reduces money available to lend.
(v) Open market operations: Buying or selling securities to the public to regulate circulation.
maurice.mutuku answered the question on August 14, 2017 at 13:10
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