
The term itself is a euphemism as it is neither open nor a market phenomenon; rather its a technique that furthers increased government spending at the expense of the unsuspecting working class.
On one hand, to directly fund government spending the TTCB sells government bonds. On the other hand, the TTCB subsequently buys back government bonds by increasing Commercial Bank balances electronically held at the Central Bank as payment. The money supply therefore expands and causes inflation.
Alternatively; the TTCB expands the money supply by making new money available electronically for loans to commercial banks at the very low repo rate (currently 3.5%). Commercial banks subsequently demand printed banknotes as necessary against its reserve balance at the TTCB.
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Source: Trinidad and Tobago Central Bank |
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