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Which one of the following activities of the Reserve Bank of India is considered to be part of "sterilization"?

UPSC · 2023 · Economy
Question:
Which one of the following activities of the Reserve Bank of India is considered to be part of "sterilization"?

Options

Conducting Open Market Operations
Oversight of settlement and payment systems
Debt and cash management for the Central and State Governments
Regulating the functions of Non-banking Financial Institutions
Answer: Conducting Open Market Operations

Explanation:
Sterilization involves the RBI’s Open Market Operations to neutralize the effects of foreign exchange inflows on domestic money supply.

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