JAMB - Commerce (2022 - No. 26)
Central banks sell treasury bills to the public to
increase cash in the banking system
raise revenue for commerical banks
raise revenue for private investors
reduce cash in circulation
Shpjegimi
Hence, by issuing treasury bills, central banks can raise short-term fund for governments and absorb surplus liquidity from financial markets simultaneously. Therefore, when there is too much money in circulation, the central bank will sell securities to reduce money surply in the economy.