2011-12-19
The Bank of Lithuania will afford commercial banks operating in the country more ample liquidity management possibilities
Starting from this week the Bank of Lithuania begins to arrange auctions of deposits, debt security purchase and repurchase transactions.
“These world-wide ordinary money market instruments will offer additional possibilities for banks operating in Lithuania to utilise their financial asset holdings and manage cash flows in a more optimal way, while more intensive trade in debt securities will make this market more liquid and deeper”, stated Darius Petrauskas, Deputy Chairman of the Board of the Bank of Lithuania.
In deposit auctions all banks operating in the country will be given a possibility to place a deposit with the Bank of Lithuania, thus creating another alternative of the utilisation of funds held by banks. Deposit auction winners will be the banks that offered the smallest interest rates.
Debt security transaction auctions will open additional borrowing possibilities for commercial banks that offered to the Bank of Lithuania the most favourable terms and conditions.
Every week the Bank of Lithuania will announce auctions also for the purchase of debt securities. Apart from providing additional liquidity management possibilities for the banks, these auctions will serve as a catalyst of this market.
In December the Bank of Lithuania will organise deposit auctions on Mondays and auctions of debt security repurchase transactions – on Tuesdays. On Wednesdays it will announce debt security purchase auctions.
Apart from these financial instruments, in managing their liquidity commercial banks currently operating in Lithuania can without any limitations exchange litas into euros at the Bank of Lithuania and take intraday or overnight credits.