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The BOM’s standing facilities

The BOM’s standing facilities are deals to cover temporary reserve deficits on the interbank market or immerse the surplus into the market. Deals should be performed by requests of banks on pre-agreed rates. The BOM’s standing facilities include overnight repo financing and overnight deposit. Interest rate levels of overnight repo and overnight deposit depend on the policy rate and are determined as follows:

  • Overnight repo financing rate = Policy rate + 1 percentage points
  • Overnight deposit rate = Policy rate - 1 percentage point

A day loan

The BOM introduced RTGS (Real time gross settlement) in order to reduce interbank settlement risks and expedite interbank transactions. The launch of RTGS required the BOM to create a day loan. Day loans are repaid on the same day and used only for ensuring smooth transactions and not for monetary policy purposes.

Day loans have no interest rate and are guaranteed by collateral assets. The collateral assets include the bills listed in the securities list developed by the Risk Management Unit of the BOM.

Standing facilities: Overnight repo financing

The BOM overnight repo financing is a loan issued to banks that do not satisfy the reserve requirement, from the closing of clearing services at banks until the opening of clearing services the following business day.

Overnight repo rate would be maximum limit of the BOM’s interest rate corridor and is equal to policy rate plus 2 percentage points.

Overnight repo financing rate (7%) = Policy rate (6%) + 1 percentage point

Standing facilities: Overnight deposit

Overnight deposit is an instrument to immerse excess reserves of banks into the market at the end of day. These deals must be performed upon requests from banks and shall be the last transaction of the banks that day.

Overnight deposit rate would be the lowest limit of the BOM’s interest rate corridor and is equal to policy rate minus 2 percentage point.

Overnight deposit rate (5%) = Policy rate (6%) - 1 percentage point

Overnight deposit must be placed in special deposit accounts at the BOM and it shall not be less than 1 billion tugrugs.