With the sophistication of financial markets rendering the money, output and price relationship unstable, by the early 1980s, major central banks began to emphasise on the price channel, i.e., policy interest rate for monetary policy transmission. As a result, the role of money market became all the more important for signaling and transmission of monetary policy.
Thus, the development of money markets across countries in terms of instruments and participants with varying risk profiles has necessitated changes in the operating procedures of monetary policy. In the case of India, the ultimate goals of monetary policy, i.e., price stability and growth, have remained unchanged over the years.