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Financial markets

Domestic markets

Our domestic markets team has responsibility for implementing monetary policy and the management of liquidity in the banking system.  These tasks are achieved through forecasting both the Crown’s and Reserve Bank’s liquidity flows and conducting various operations in financial markets to ensure that actual overnight rates trade at or close to the Official Cash Rate (OCR).  The team also provide standby facilities for cash and government bonds to registered market participants.

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Financial market operations

We undertake a number of operations to manage liquidity within the market including:

  • open market operations (OMO), which are a daily tender involving either repo or reverse-repo of New Zealand government securities. These are designed to either inject or withdraw cash from the banking system
  • foreign exchange (FX) swaps, which inject or withdraw cash in New Zealand dollars from the banking system in exchange for United States dollars
  • bond repurchases of New Zealand government bonds that are soon to mature. These are designed to smooth out the large injection of cash to the banking system when a large tranche of New Zealand government bonds matures.

The size of these operations is based on estimates, and the market response to some operations may be unexpected.

Repo eligibility

This section details the securities that we accept as collateral in our domestic market operations and standing facilities, and the application criteria and process.

Repo eligibility
Repo eligibility

Large Scale Asset Purchase programme

Find out about our Large Scale Asset Purchase Programme under which we buy New Zealand government bonds and Local Government Funding Agency debt in the secondary market.

LSAP programme
Large Scale Asset Purchase programme

Also in this section

Review of mortgage bond collateral standards

Find out about our consultation on a proposal to introduce a new residential mortgage-backed securities framework and a new standard for mortgage bonds.

Domestic markets media releases

Access all our media releases and financial statements.