Discount policy, which implies restricting the access of banks to central bank credit or raising the cost of refinance, has also been used by countries to sterilise capital inflows. This instrument cannot, however, be used in the current context when there is plenty of liquidity in the money market and there is no borrowing from the central bank.
However, this instrument may go against the long-term objectives of monetary and credit policy. Varying the reserve requirements is yet another policy tool. Mobilising Government deposits has served as a variation to absorption of reserves in some countries. Variable deposit requirements in the nature of interest-free deposits with the central bank is BIS Review 76/1997  -7-  another form of discouraging capital inflows.