RDP 8702: Open Market Operations in Australia: A U.S. Perspective 5. Summary

This paper presents a comparison between operating procedures and money market institutional arrangements in Australia and the United States. The basic findings are that although there are significant institutional differences between the two countries, both monetary authorities use similar operating procedures. These similar procedures account, at least in part, for the similar behaviour of interest rates in the two countries. However, institutional differences do imply some interesting differences regarding the types of policies that produce optimal monetary control. The analysis suggests that, with existing institutional arrangements in Australia, interest rates are more appropriate than reserves as an intermediate objective in terms of monetary control.