Principles of open market operations.
Section 96
SEC. 96. Principles of open market operations.—The open market purchases and sales of securities by the Central Bank shall be made exclusively for the purpose of achieving the objectives of the national monetary policy and shall be limited to the operations authorized in sections 97 and 98 of this Act. Accordingly in periods of inflation or as long as inflationary dangers exist, the Central Bank shall refrain from open market purchases and at such times shall endeavor to reduce its security holdings and/or to sell the evidences of indebtedness which it is permitted to issue under the provisions of section 98 of this Act. Conversely, whenever the national monetary policy requires an expansion of the money supply, the Central Bank may repurchase its own evidences of indebtedness prior to their date of maturity, as authorized in section 98, and may acquire the securities to which reference is made dm section 97. In purchasing said securities, the Central Bank shall give preference to short-term obligations, in order that the Bank may be in a better position to reduce the money supply should conditions in the future so require. Whenever securities meeting the conditions established in section 97 of this Act represent obligations in foreign currencies, the decisions of the Monetary Board to purchase and sell such securities shall be governed by the adequacy of the international reserve of the Central Bank and by the effect which such operations would have on the balance of payments and the volume of the money supply.