What is the Bank of Canada's most frequently used and most flexible tool?

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Open market operations involve the purchase or sale of government securities, which affects the amount of money in circulation in the economy. This is the Bank of Canada's most frequently used tool and the most flexible, as it can be used to adjust the money supply quickly in response to changing economic conditions. The discount rate is the interest rate charged by the central bank on loans to commercial banks and is not as flexible as open market operations. The reserve requirement is the amount of money banks are required to hold as a proportion of their deposits, and while it is an important tool, it is not as frequently used as open market operations. The prime rate is the interest rate that commercial banks charge their best customers for loans, but it is not directly set by the Bank of Canada.

What Is the Bank of Canada's Most Frequently Used and Most