Explain the tools of a Central Bank when it comes to controlling the money supply (generally, not country-specific as the tools themselves are common across all Central Banks). What are the problems associated with each of these tools?

There are some following tools that a Central Bank could implement to control the money supply:

• Printing more notes: This would increase the money supply in the economy. However, it would cause a higher inflation since the actual material value of the economy does not increase. In fact, a Central Bank would rarely implement this tool.
• Reserve requirement: This tool would limit the loanable fund that can provide to the economy on received deposits in the banking system. This tool would be regularly imposed on the banking system since it would have an immediate impact on the money supply. However, there would be a concern associated with this tool, which will lower the operational efficiency and potential earnings at small-size banks due to the lack of available funds for lending. Or, if a bank does not have a strategy to attract deposits, a high reserve requirement would impact negatively its flow of capital.
• Open market operations (OMO): A central bank would engage this tool to sell or purchase the government securities. The Central Bank would sell securities when it intends to reduce the money supply and purchase the securities back when the money supply is expected to increase. This tool would have a significant impact on the money supply since the volume of money would be large. However, banks and other financial institutions might not favor to attend the market based on their interests, which will affect the purpose of increasing or decreasing the money supply.