Media Release Expansion of Domestic Market Facilities

Conditions in global money markets have deteriorated significantly in recent weeks, with flow-on effects to domestic markets.

In order to provide authorised deposit-taking institutions (ADIs) greater flexibility to manage their liquidity in these circumstances, the Reserve Bank has decided to make some changes to its domestic market operating procedures. Specifically:

• The current restriction that prevents an institution from using residential mortgage-backed securities (RMBS) and asset-backed commercial paper (ABCP) of a related party as collateral in its repo operations with the Bank will be relaxed. This also applies to the US dollar term repo facility.
• The Bank will offer six-month and one-year repos each day in its market operations.
• Restrictions on substituting collateral within an existing repo, with the exception of general collateral, will be removed. Where the substitution includes a change in the asset class of collateral, the margin applying to that collateral will be adjusted accordingly.