Removal of temporary crisis liquidity facility
Commenting on the adjustment Reserve Bank Deputy Governor Grant Spencer said:
"Financial Market conditions continue to stabilise. Use of the RBNZ's special facilities, specifically for the purpose of accessing term funding, has been low with New Zealand banks able to access funding from their normal market sources. As a result, the RBNZ is removing the regular Tuesday Open Market Operation which is the last remaining temporary liquidity facility introduced during the financial crisis."
The regular Tuesday Open Market Operation (OMO) involves repurchase transactions for maturities of up to three months. There has recently been very little use of this facility and the RBNZ retains the ability to offer term maturity dates at its discretion in its normal OMOs.
This change will take effect from 1 December 2010, with the final regular Tuesday OMO scheduled for 30 November 2010. The RBNZ will be reviewing over coming months the remaining measures initiated during the crisis , in particular the range and credit quality of securities that are repo eligible in RBNZ operations. Further detail will be announced on this in due course.
"These decisions have no implications for the stance of monetary policy," Mr Spencer said.
Manager, Market Operations