Which operation permits banks to exchange less liquid collateral for government securities for up to 30 days?

The operation that allows banks to exchange less liquid collateral for government securities for a limited period of up to 30 days is commonly known as the Discount Window. This facility provides banks with access to short-term loans from the central bank, using various forms of collateral. By allowing banks to exchange less liquid assets for more liquid government securities, the Discount Window helps ensure liquidity in the banking system and supports stability in the financial markets.

The focus on less liquid collateral is crucial, as banks may hold assets that are not easily sellable in times of stress. By accessing the Discount Window, they can obtain the liquidity necessary to maintain operations, meet withdrawal demands, or address other financial pressures without having to sell those less liquid assets at unfavorable prices.

Other options, such as Open Market Operations, typically involve the buying and selling of government securities to regulate liquidity over a longer term and do not specifically cater to the exchange of collateral in the manner described. The Operations Standing Facility and Liquidity Facility also serve purposes related to liquidity and monetary policy, but they do not specifically provide the mechanism for exchanging less liquid collateral as directly as the Discount Window does.