Monetary policy tool refers to the policy means adopted by the central bank to adjust intermediary indicators and achieve monetary policy objectives. There are many monetary policy tools, and all policies that can affect the money supply in the market can be said to be monetary policy tools, such as credit control. The three traditional policy tools adopted by the central bank for many years, namely, the statutory deposit reserve ratio, rediscount policy and open market business, are sometimes called "three magic weapons", which are mainly used to regulate the total amount of money.

(1) Statutory deposit reserve ratio: refers to the ratio at which commercial banks and other financial institutions are required to pay part of their deposits to the Central Bank as reserves according to law. Impact: ① Even if the adjustment of the reserve ratio is small, it will cause huge fluctuations in the money supply; ② Other monetary policy tools are mainly deposit reserve; (3) Even if commercial banks and other financial institutions hold excess reserves for various reasons, the adjustment of statutory deposit reserve will have an effect; (4) Even if the deposit reserve remains unchanged, it will greatly limit the ability of the commercial banking system to create derivative deposits. Limitations: ① The effect of statutory deposit reserve ratio adjustment is relatively strong, which makes it tend to be fixed; ② The influence of deposit reserve on various financial institutions and different types of deposits is inconsistent, and the effect of monetary policy may be difficult to grasp because of these complicated situations.

⑵ rediscount policy: refers to the policies and regulations formulated by the central bank when it applies to the central bank for rediscounting the unexpired bills held by commercial banks. Including two aspects: the determination and adjustment of temporary rediscount interest rate; The second is to stipulate the qualifications for applying for rediscount from the central bank. Impact: ① Adjusting the rediscount rate can change the total money supply; (2) The provisions of rediscount eligibility conditions can play a role of restraint or support, and can change the flow of funds. Limitations: ① the initiative is not limited to the central bank, and even changes in the market may violate its policy will; ② The adjustment of rediscount rate is limited; ③ The rediscount interest rate is easy to adjust, but the market interest rate fluctuates frequently at any time, which makes commercial banks at a loss.

⑶ Open market business: refers to the policy behavior of the central bank to openly buy and sell securities in the financial market in order to adjust the amount of money in the market. Results: ① Strong initiative and active operation according to policy objectives; (2) high flexibility, which can flexibly control the quantity and direction of buying and selling; (3) mild regulation and small vibration; (4) The influence range is wide. Limitations: ① The central bank must have sufficient financial strength to intervene and control the whole financial market; (2) There must be a well-developed and perfect financial market, which must be nationwide, with complete types of securities and a certain scale; ③ It must be coordinated with other policy tools.