Regulation on Central Bank Refinancing

This regulation covers the following topics and includes the following provisions:

General provisions:

• BOM will provide banks with temporary liquidity as a lender of last resort and to conduct open market operations;
• Refinancing will include discount facility, ‘repo’ financing and overnight loans.

Discount facility:

• This is a facility through which the BOM purchases and finances bank-owned assets on a discount basis;
• Instruments eligible for the discount facility are: Central Bank Bills (CBBs), short-term government securities, foreign assets and other liquid assets.

Repo funding:

• The BOM’s repo financing is of the following form: at the end of the agreed period, the seller of the asset will repurchase the previously owned asset at the agreed price and simultaneously, the BOM will sell the asset back to the previous owner;
• Assets eligible for repo financing include:
  • CBBs;
  • Short-term government securities;
  • Government and Central Bank bills that the “Organization for Economic Cooperation and Development (OECD)” members issue;
  • Liquid securities from foreign financial institutions;
  • Promissory notes;
  • Time deposits at the BOM and foreign banks.

Overnight credits:

• The BOM may extend overnight credit to banks between the closing of the clearing settlement of the current day and the opening of the clearing settlement of the next day.

The document concludes with miscellaneous provisions regarding: temporary suspension, monitoring and reporting of refinancing operations and punitive measures for violation of regulations.