What is moral suasion in money supply?

Moral suasion is a non-coercive approach used by central banks to influence financial institutions and the broader economy regarding money supply and credit conditions. Through persuasion and communication, central banks encourage banks to align their lending practices with desired economic goals, such as controlling inflation or stimulating growth. This can involve public statements, informal discussions, or guidance on policy objectives, aiming to foster cooperation without imposing direct regulations. While not legally binding, moral suasion can effectively shape market behavior and expectations.