March 2010

CBS amended relevant guidelines to ensure that the Bank does not breach Article VIII of the IMF Articles of Agreement when undertaking foreign exchange transactions. Article VIII defines the “General Obligations of Members” with regard to the avoidance of restrictions and discriminatory practices against other currencies. It refers to the spread allowed for spot exchange transactions between the currencies of member countries of the IMF and stipulates that the rate used for spot transactions shall not differ from prevailing rate by more than 2 percent.

December 2009

Following the introduction of the Standing Credit Facility in June, the Bank introduced a Standing Deposit Facility to provide an avenue for the banks to earn a minimum return on any overnight excess reserves.  However, the use of this facility is to commence early 2010.

October 2009

CBS added the Credit Auction Arrangement (CAA) to its recently developed arsenal of monetary policy instruments for the purpose of liquidity management.  This instrument allows the Bank to inject liquidity into the system as part of its Open Market Operations (OMO) in the event that there is a liquidity shortage.

In addition, consistent with the move it took in the previous month, the Bank brought down the Minimum Reserve Requirement by another percentage point to 10% on October 1.

September 2009

Following the decision of the Bank to have a looser monetary policy in order to stimulate the economy, it reduced the Minimum Reserve Requirement from 12% to 11% on September 1.

August 2009

In line with the new approach to be a modernised institution by adopting international norms, the Bank took the initiative to abolish the Local Asset Ratio (LAR) which stood at 35%.  This decision was taken as CBS moves away from the traditional direct monetary policy instruments towards market-based instruments as part of its new monetary policy framework. 

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