Central banks manage daily money market liquidity using Open Market Operations (OMO), primarily executed through temporary transactions known as Repurchase Agreements (Repos). [1, 2, 3]

When the open market trading desk needs to inject short-term cash into the banking system to prevent interest rates from spiking, it launches an overnight Repo operation with primary dealers:

Open Market Desk Buys Sovereign Bond -> Injects Digital Reserve Cash -> Primary Dealer Repurchases Bond Next Day with Interest

The interest rate charged on this transaction is set through competitive bidding or fixed-rate auctions, establishing the baseline cost of short-term capital across the financial system.