The MOC was established by the CBS Board with the responsibility to formulate and oversee the implementation of monetary policy within the general guidelines determined by the CBS Board.  The Market Operations Unit (MOU) in the Policy, Market Operations and Statistics Division (PMOSD) will recommend all matters related to the use of monetary policy instruments.  The MOC shall report on its activities to the CBS Board and make recommendations on the adoption of new monetary policy instruments and on changes in the stance of future monetary policy.

Composition

The Chairperson shall be the Governor and the other representatives of the Committee shall be the Deputy Governor and from the following Divisions:

o       Banking Services Division

o       Financial Services Supervision Division

o       Policy, Market Operations and Statistics Division.

Functions

The primary function of the MOC shall be to evaluate developments and trends in overall liquidity of the financial system and initiate the use of instruments under the control of the CBS to meet monetary targets as adopted by the CBS Board.  The decisions will be guided by liquidity analysis and policy recommendations by the MOU. 

The MOU shall decide on the timing and size of any market operations, including the purchase and sale of government securities, repurchase and reverse repurchase transactions, the conduct of credit and deposit auctions and the purchase and sale of foreign currency.  As required, the MOC shall decide on the level of interest rate to be used in market operations and on standing facilities. The MOC shall oversee the results of any auction and decide on the allocation by verifying each and every bid.

As and when necessary, the Policy and Research Unit (PRU) of the PMOSD shall draw up and review the procedural instructions for market operations and ensure that the guidelines in force are being administered correctly and equitably.  The MOC shall ensure that the CBS market operations are conducted in a transparent manner and that the results are published appropriately.

Meetings

The MOC shall meet regularly and any decision has to be supported by the Governor.  Minutes of the meeting shall be taken which records all formal decisions and the objection of any member to a decision.  If the Governor is not present, the Deputy Governor will preside and a quorum of a majority of the members shall be required for the Committee to make a decision.