When a government or central bank buys or sells some of its reserves of foreign currency this can affect the country’s money supply. Selling reserves decreases the supply of the domestic currency; buying reserves increases the domestic money supply. Governments or central banks can sterilize (that is, cancel out) this effect of foreign exchange intervention on the money supply by buying or selling an equivalent amount of securities. For example, if the government increases reserves by buying foreign currency the domestic money supply will increase, unless it sells securities such as treasury bills to mop up the extra demand.