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sterilisation

sterilisation
 n.— «Central banks build reserves by creating domestic currency to buy the dollar and euro reserves. This has a cost, via inflation or through what is known as “sterilisation.” Sterilisation costs arise when a central bank offsets its money creation activities by selling assets to “soak up” the domestic money it just created. Generally, it issues bonds. The interest rate paid on these bonds can exceed what the central bank earns on the dollars or euros it has bought. So there is a running cost to sterilisation.» —“Market insight: Time to pounce on currency mispricings” by Tina Vandersteel Euro2day (Greece) Jan. 8, 2008. (source: Double-Tongued Dictionary)

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