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Reserve Bank update on liquidity measures

The Reserve Bank today announced further details of the new liquidity measures announced on 7 May. As announced then, these new liquidity facilities include the following:

  • The extension of the range of securities eligible for acceptance in the Reserve Bank's domestic liquidity operations to include: NZ-registered NZ dollar AAA-rated securities, including Residential Mortgage-Backed Securities, and AA-rated NZ government sector debt – including Government agencies, SOEs and Local Authorities.
  • The discount margin applied in the Bank's Overnight Reverse Repo Facility will be standardised at 50 basis points above the OCR for all eligible securities.
  • A graduated ‘haircut' regime will replace the existing limit structure for all securities eligible for domestic liquidity operations.
  • The extension of the Overnight Reverse Repo Facility to allow loans to a maximum maturity of 30 days.

The Bank's liquidity arrangements will be reviewed again in around 12 months' time. The new facilities will take effect from 3 June 2008, except in the case of Residential Mortgage-Backed Securities which will be acceptable from 31 July 2008. The Bank expects to be able to announce the final criteria for Residential Mortgage-Backed Securities within two weeks.

Full details of the Bank's liquidity facilities including applicable haircuts for eligible securities, eligibility criteria and operational guidelines are available on the Bank's website.

These measures are aimed at bolstering the liquidity of the NZ markets in the event of further significant disruption to global markets and have no implications for the stance of monetary policy.

For further information contact:
Te Okeroa
Manager, Market Operations
[email protected]