When central bank officials issue letters and public statements in an effort to persuade individuals and institutions to follow what the central bank regards as more desirable behavior, this policy tool is called:
A) Moral suasion
B) Regulation Q
C) Margin announcements
D) Announcement effects
E) None of the above

Question

Quizplus · Accepted Answer

Moral suasion refers to the practice where central bank officials use public statements or letters to influence or persuade market participants and institutions to adhere to policies or behaviors that the central bank deems desirable, without the use of formal regulatory powers.

When Central Bank Officials Issue Letters and Public Statements in an Effort