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To intervene in the " Business Cycle ", a Central Bank may choose to go into the open market and buy or sell Government Bonds , which is known as Open Market Operations to increase reserves. Open Market Operations are when the central bank buys bonds from other Bank s in exchange for Cheque s. These local banks then cash the cheques, which allow them to take money from the central bank. This action thus decreases any credit the local banks may owe to the central bank, and also increases their money supply. This thus increases reserves. SEE ALSO
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