Domestic markets

The Reserve Bank's Domestic Markets section (DM) is responsible for implementing monetary policy and managing liquidity in the banking system. It achieves this by forecasting both the Crown's and the Reserve Bank's liquidity flows, and conducting operations in financial markets to ensure actual overnight rates trade close to the Official Cash Rate (OCR). These include Open Market Operations (OMO), FX swaps, basis swaps and the repurchase of Government bonds that are soon to mature. DM also provides standby facilities for cash and Government bonds to registered market participants.

This Reserve Bank Bulletin article contains more details on how the Bank manages liquidity for the implementation of monetary policy. 

The Reserve Bank is undertaking Large Scale Asset Purchases (LSAPs) of New Zealand Government bonds and Local Government Funding Agency debt in the secondary market, consistent with the decisions of the Monetary Policy Committee made on 22 March 2020 and 3 – 5 April 2020.

This section details the securities acceptable in the Reserve Bank’s domestic operations and standing facilities, including the haircuts applied to those securities. It also includes the criteria applied to the acceptable securities and details the application process.

The operating rules and guidelines document details the rules and guidelines for all domestic market operations conducted by the Financial Markets department (including counterparty application forms). It has been broken into four sections.

The Reserve Bank is proposing an enhanced mortgage bond standard aimed at supporting confidence and liquidity in the financial system. This follows a review of domestic and international mortgage bond collateral standards.

This section details the two funding programmes launched by RBNZ during 2020. Funding for Lending provides monetary stimulus to the economy in order to meet the Bank’s consumer price inflation and employment remit, and the Term Lending Facility supports the Crown’s Business Finance Guarantee Scheme.