Centre for Technical Central Bank Cooperation. Compendium Monetary Policy Frameworks and Central Bank Market Operations

Transcription

1 Centre for Technical Central Bank Cooperation Compendium Monetary Policy Frameworks and Central Bank Market Operations Outcome of the Implementing Monetary Policy workshop January 2014

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3 Page 3 Contents 1. Introduction Monetary policy frameworks by country (in alphabetical order)... 5 a. Bulgaria... 6 b. Croatia... 8 c. Euro area countries d. Haiti e. Indonesia f. Iran g. Nepal h. Russia i. Sri Lanka j. Ukraine List of participants Course participants came from Cyprus, Ireland, Malta, Slovakia.

4 Page 4 1. Introduction From January 2014, the Deutsche Bundesbank hosted one of its biannual international workshops entitled Implementing Monetary Policy. The workshop was targeted at central bank staff working in the field of monetary policy of their central bank. Given the importance of efficient policy implementation for the overall success and the achievement of the central bank s ultimate goal, the work-shop aimed to improve the general understanding of the functioning of different monetary policy instruments and procedures. Lectures by experts from the Deutsche Bundesbank gave detailed insights into various aspects of monetary policy implementation ranging from liquidity analysis and open market operation procedures to crisis measures and collateral management in the Eurosystem. An additional aim of the workshop was to provide a forum for a broader discussion of the differences in the design of monetary policy instruments at central banks around the world, the pros and cons related to these designs as well as specific challenges regarding the daily tasks linked to the implementation of monetary policy in a country-specific environment.

5 Page 5 2. Monetary policy frameworks by country The following pages contain an overview of the monetary policy frameworks and where applicable details concerning the use of monetary policy instruments of those central banks that participated in the Deutsche Bundesbank workshop Implementing Monetary Policy, which took place from January 2014 in Frankfurt. The cross-country comparison illustrates both the differences and similarities between monetary policy frameworks. While the range of instruments used by central banks around the world to implement their monetary policy is rather similar in most cases including a combination of reserve requirements, open market and standing facilities a closer look at the specific design of those instruments and the related procedures in place reveals numerous distinctions, for example with regard to types of, maturities, frequencies, pricing methods, limits etc. While the comparison of differences in monetary policy frameworks is an interesting exercise in itself, it also provides a good starting point for further analysis of the various factors which can explain those differences. Both the analysis of the differences in monetary policy frameworks and their country-specific determinants (whether institutional, economic or political) can significantly improve our understanding of monetary policy and facilitate the dialogue among central bank experts and policy-makers worldwide.

6 Page 6 Bulgaria Bulgarian National Bank (BNB) 1 Legal framework for monetary policy-making 1.1 Name and legal status of monetary policy-making entity 1.2 Size and composition of monetary policy committee 1.3 Appointment of members (length of term, renewability) 1.4 Process of decision-making & voting rights 1.5 Frequency of policy meetings 1.6 Pre-scheduling of meetings 2 Monetary policy mandate 2.1 Major mandate(s) (in relation to monetary policy) 2.2 Monetary policy target 2.3 Legal status and involvement of government 2.4 Target indicator, time frame 2.5 Disclosure of performance 3 Monetary policy implementation 3.1 Policy signal 3.2 Operational target BNB operates under currency board arrangement, there is no provision of monetary policy. 3.3 Standing facilities Yes Forms & maturity Loans to commercial banks with original maturity of 1 month, with potential to extend up to 3 months (if there is a systemic risk) Pricing method Interest rate which is higher than the calculated base interest rate Access limits Only accessible for banks with proven solvency ratio; no limits towards individual banks, but the overall credit exposure of BNB equals the excess of its FX assets over its total liabilities; Corridor width 3.4 Reserve requirements Yes Reserve ratios 10 % of the deposit base, excluding: funds from abroad 5 % and funds from local and government budgets 0 %; Reserve base All attracted funds in domestic and foreign currency, excluding funds from: other local banks, foreign branches of local banks, through debt/capital instruments and subordinated term debt; Averaging Yes Carry-over No Length and beginning of maintenance period Length is 1 month, beginning with the 4th day of the reporting basis period and ending on the 3rd day of the following period Remuneration No Remuneration of excess reserves No Reserve holdings Settlement accounts in BGN, reserve accounts in euro, 50 % of cash in vaults and ATMs, part of the funds on bank's settlement accounts in TARGET2

7 Page 7 4 Market 4.1 Main Functions Types of operation Maturity of Frequency of Pricing method 4.2 Other discretionary Yes Functions Liquidity injection or withdrawal Types of operation BNB provides opportunity for FX exchange (Euro-BGN) Maturity of Frequency of Pricing method Fixed exchange rate; 4.3 Collateral Yes Eligible collateral for standing facility Monetary gold, FX (euro, US dollars, Swiss francs) Eligible collateral for open market Discretion of central bank to expand/ limit collateral types Risk control measures 5 Monetary Policy Communication 5.1 Announcement of policy decision 5.2 Timing and media channel used 5.3 Key content of policy announcement 5.4 Explanation of decision 5.5 Associated documents 5.6 Publication of minutes 5.7 Publication of economic/inflation forecasts 5.8 Publication of liquidity forecast 5.9 Dissemination of information on Yes

8 Page 8 Croatia Croatian National Bank (CNB) 1 Legal framework for monetary policy-making 1.1 Name and legal status of monetary Council of the Croatian National Bank policy-making entity 1.2 Size and composition of monetary policy committee Governor, deputy governor and 6 vice-governors 1.3 Appointment of members (length of term, renewability) 1.4 Process of decision-making & voting rights Members are appointed by the Croatian Parliament. Their term is 6 years. There is no limit on reappointment. The Council of the CNB shall take decisions with a two-thirds majority of the members present at the meeting. Should the Council not reach the necessary decision, the Governor of the Croatian National Bank shall take the decision. 1.5 Frequency of policy meetings At least ten times in calendar year 1.6 Pre-scheduling of meetings Dates are fixed and published a year in advance 2 Monetary policy mandate 2.1 Major mandate(s) Price stability (in relation to monetary policy) 2.2 Monetary policy target No formal target 2.3 Legal status and involvement of Not applicable government 2.4 Target indicator, time frame Not applicable 2.5 Disclosure of performance Yes. Consumer price index is published on CNB's website and in Monthly Bulletin. 3 Monetary policy implementation 3.1 Policy signal Exchange rate volatility 3.2 Operational target Exchange rate 3.3 Standing facilities Yes Forms & maturity Loans and deposits; both overnight Pricing method Loans: fix rate (currently at 5 %); Deposits: not remunerated Access limits No limit on deposits, lending limited by collateral Corridor width 500 bp 3.4 Reserve requirements Yes Reserve ratios Single ratio: currently 12 % Reserve base Domestic and foreign exchange base: received deposits and loans, issued debt securities, hybrid and subordinated instruments and other financial liabilities Averaging Yes Carry-over No Length and beginning of maintenance 1 month, beginning of maintenance period is second Wednesday of a month period Remuneration No Remuneration of excess reserves No Reserve holdings Domestic currency component: settlement acc.in the CNB's large value payment system (HSVP) and in an account for covering negative balance in the clearing acc. within the National Clearing System. Foreign exchange component: liquid foreign exchange claims against OECD countries and credit institutions in OECD countries, the lowest rating of which is AA- (S&P's and Fitch Ratings) and Aa3 (Moody's).

9 Page 9 4 Market 4.1 Main Open market operation (not conducted since 14 october 2009) Functions Liquidity injection Types of operation Reverse repo Maturity of 1 week Frequency of Weekly, on Wednesday Pricing method Variable rate tender 4.2 Other discretionary Fine tuning and structural Functions Liquidity injection or withdrawal Types of operation Repo, reverse repo, outright buying and sellling of securities Maturity of Varies Frequency of As needed Pricing method Varies 4.3 Collateral Collateral is used in liquidity providing and withdrawal Eligible collateral for standing facility Debt securities with a fixed principal amount and with a coupon that cannot result in a negative cash flow or with a zero coupon, denominated in kuna or in kuna with a currency clause. Eligible issuers are: the Ministry of Finance of the Republic of Croatia, the Croatian National Bank, other Member States of the European Union and central banks of Member States of the European Union, the European Central Bank and supranational financial institutions Eligible collateral for open market Ministry of Finance T-bills Discretion of central bank to expand/ Yes. limit collateral types Risk control measures Haircut. 20 % on Ministry of Finance T-bills, 25 % on Ministry of Finance bonds. 5 Monetary Policy Communication 5.1 Announcement of policy decision Yes 5.2 Timing and media channel used Following a meeting of the Council of the CNB, a press release is issued and published on the CNB's website. 5.3 Key content of policy announcement Change in reserve requirements, explaning reasons for foreign exchange intervention. 5.4 Explanation of decision Shortly. Press release on CNB's website. 5.5 Associated documents Monthly Bulletin (typically provides in greater detail the economic and monetary analyses underlying the Council s overall assessment of the economic and monetary situation and the risks to price stability, as well as its policy decisions). 5.6 Publication of minutes No 5.7 Publication of economic/inflation Yes forecasts 5.8 Publication of liquidity forecast No 5.9 Dissemination of information on Information on open market (volumes and aggregated prices) is published on CNB's website, Reuters and Bloomberg. Information on fine tuning and structural is not available to the general public.

10 Page 10 Euro area European Central Bank (ECB) 1 Legal framework for monetary policy-making 1.1 Name and legal status of monetary policy-making entity Governing Council of the Eurosystem 1.2 Size and composition of monetary policy committee 1.3 Appointment of members (length of term, renewability) 1.4 Process of decision-making & voting rights Six members of the Executive Board of the ECB and the Governors of the euro-area NCBs Eight years and not renewable for the Members of the Executive Board of the ECB, not less than five years for NCB Governors Voting principle but monetary policy decisions are taken by consensus, following an intense discussion about the external environment and an analysis of economic, monetary and financial developments in the euro area 1.5 Frequency of policy meetings The Governing Council meets twice a month, with the first meeting of each month being almost exclusively devoted to an assessment of the overall economic and monetary situation and the risks to price stability, followed by an evaluation of the monetary policy stance and interest rate decisions. The second meeting does typically not discuss issues relating to the current monetary policy conduct. As a rule, each meeting is scheduled for one day 1.6 Pre-scheduling of meetings Meetings are pre-scheduled and announced on the website well in advance 2 Monetary policy mandate 2.1 Major mandate(s) Maintain price stability in the euro area (in relation to monetary policy) 2.2 Monetary policy target Monetary policy aims to maintain the annual change in the HICP for the euro area below but close to 2 % over the medium term 2.3 Legal status and involvement of government 2.4 Target indicator, time frame Harmonised Index of Consumer Prices (HICP) for the euro area; medium-term time horizon 2.5 Disclosure of performance Through regular and timely communication to the markets, media and general public. 3 Monetary policy implementation 3.1 Policy signal Key policy rate 3.2 Operational target Short term (money market) rate serves as operational target 3.3 Standing facilities Yes Forms & maturity Lending and deposits Pricing method Fixed corridor around key policy rate Access limits Lending: collateral - deposits: no limit Corridor width As of Jan 2014: 75 bp (asymmetric); before crisis 200 bps (symmetric) 3.4 Reserve requirements Yes Reserve ratios Normal framework: Domestic currency/foreign currency: 2 % Ratio was lowered to 1 % in response to crisis Reserve base Short term liabilities Averaging Yes Carry-over No Length and beginning of maintenance 4 5 weeks period Remuneration Yes, fully remunerated at main operational rate Remuneration of excess reserves No Reserve holdings Current account holdings with respective NCBs

11 Page 11 4 Market 4.1 Main Main refinancing operation (MRO), long-term refinancing operation (LTRO) Functions Basic refinancing (liquidity provision) Types of operation Collateralised loan Maturity of 1 week / 3 months Frequency of Weekly & monthly Pricing method Fixed rate, full allotment 4.2 Other discretionary Functions Liquidity injection or withdrawal Types of operation Fine tuning, structural, outright purchases Maturity of Varies Frequency of As needed Pricing method As appropriate (fixed or variable) 4.3 Collateral Eligible collateral for standing facility Same as for open market Eligible collateral for open market Discretion of central bank to expand/ limit collateral types Wide range of generally accepted marketable and non-marketable assets; Collateral framework defines selection criteria The Governing Council has discretion to expand the list of eligible assets; only limited by art of ESCB Statute requesting adequate collateral ; adequate depends on the context (emergency liquidity assistance is done according to national rules). Not in the very short-term. Eligible collateral is already large and diversified Risk control measures Selection criteria, valuation haircuts, margin calls, limits 5 Monetary Policy Communication 5.1 Announcement of policy decision Yes 5.2 Timing and media channel used Press release & press conference immediately after monetary policy meetings. 5.3 Key content of policy announcement Decision on minimum bid rate on the main refinancing and the interest rates on the marginal lending facility and the deposit facility. 5.4 Explanation of decision Press release is kept factual; During the press conference the ECB President explains the Governing Council s overall assessment underlying its policy decision in greater detail in the Introductory Statement and a Q&A session. 5.5 Associated documents Monthly Bulletin (provides in greater detail the economic and monetary analyses underlying the Governing Council s overall assessment of the economic and monetary situation and the risks to price stability, as well as its policy decisions). 5.6 Publication of minutes No 5.7 Publication of economic/inflation Yes forecasts 5.8 Publication of liquidity forecast Yes, the ECB publishes the liquidity situation on a daily basis 5.9 Dissemination of information on Detailed information regarding open market is published via various channels (ECB website, Bloomberg, other data providers)

12 Page 12 Haiti Central Bank of Haiti 1 Legal framework for monetary policy-making 1.1 Name and legal status of monetary policy-making entity 1.2 Size and composition of monetary policy committee 1.3 Appointment of members (length of term, renewability) 1.4 Process of decision-making & voting rights Monetary Policy Committee (MPC) mostly Ad Hoc ad hoc and not yet a formal central bank entity The approximately 20 Members of the MPC belong only to the central Bank. They include 5 members of the central bank s Board and the heads of the principal technical deparments The members of the MPC are appointed by the Board. There is no declared term for their mandate. However the 5 members of the central bank s Board are appointed by the Head of the State for 3 years and must be approved by the Parliament. Their term is renewable Decisions are generally made by consensus and are mostly discretionary rather than guided by clear rules 1.5 Frequency of policy meetings The MPC convenes regularly on a weekly basis, reflecting the frequency of the central bank s open market, to assess the macroeconomic situation and to decide the subsequent monetary policy stance. However, the Governor or the Board can request extraordinary sessions 1.6 Pre-scheduling of meetings Unless very exceptional circumstances, the meetings are scheduled to take place every Monday at 2.30 pm or the next working day of the week 2 Monetary policy mandate 2.1 Major mandate(s) (in relation to monetary policy) Pursuant to the law passed in August 1979, the mandate of the Central Bank of Haiti is to achieve price stability and exchange rate stability, as well as to create appropriate conditions to boost growth and employment 2.2 Monetary policy target The Central Bank of Haiti has a monetary targeting regime. Base money is used as the intermediate target. The bank monitors quarterly targets for base money and its components with special focus on the central bank s NDAs (net domestic assets) 2.3 Legal status and involvement of government The law empowers the central bank to conduct monetary policy in coordination with the Ministry of Finance. They define policy targets and discus them with the IMF for the most part 2.4 Target indicator, time frame The MPC approach consists of estimating the growth rate of GDP and inflation as the targets of the government. Money demand can then be estimated in real terms. It follows a quarterly distribution taking into account the seasonal factors. The MPC also analyses the impact of liquidity supplied to the government through possible monetary financing and as a counterpart to the central bank s NFAs on the final inflation objective 2.5 Disclosure of performance The central bank publishes a monthly inflation report and an annual report on macroeconomic and financial situation of the country. Hearings before the parliament occur rarely 3 Monetary policy implementation 3.1 Policy signal Central bank policy rate 3.2 Operational target The opertional target is the interest rate on the central bank s 91 days bond or the volume announced 3.3 Standing facilities Yes Forms & maturity Not applicable Pricing method Not applicable Access limits Not applicable Corridor width Not applicable

13 Page Reserve requirements Yes Reserve ratios Different ratio, above 30 % Reserve base Deposit Liability Averaging No Carry-over Yes Length and beginning of maintenance 15 days period Remuneration No Remuneration of excess reserves No Reserve holdings Both current account holdings with CB an vault cash 4 Market 4.1 Main Issuance of Bank of Republic of Haiti bonds Functions To mop up the excess liquidity of the banking system and avoid its use on the exchange market Types of operation Repo Maturity of The securities of the central bank are issued with different maturities: 7,28 and 91 days Frequency of Operations taken place on a weekly basis Pricing method Rates are fixed over an undefined period and can change depending on the fundamentals of the economy 4.2 Other discretionary Currency swaps Functions To partially reduce the gap in the supply on the foreign exchange market in order to avoid abrupt exchange rate volatility and to remove some excess liquidity at the same time Types of operation Eg Repo and reverse repo, outright purchases, deposits Maturity of 3 or 6 months Frequency of Non-regular Pricing method Fixed rates 4.3 Collateral Not applicable Eligible collateral for standing facility Not applicable Eligible collateral for open market Not applicable Discretion of central bank to expand/ Not applicable limit collateral types Risk control measures Not applicable 5 Monetary Policy Communication 5.1 Announcement of policy decision Yes. But no annoucement when the status quo is maintened 5.2 Timing and media channel used The decision is channelled through the website of the central bank and the principal newspapers. 5.3 Key content of policy announcement Interest rates and the auctions volume 5.4 Explanation of decision Not applicable 5.5 Associated documents The decision is explained ex post in a quaterly Monetray Policy Note channeled through the central bank website 5.6 Publication of minutes Minutes are not published 5.7 Publication of economic/inflation Only inflation forecasts are published forecasts 5.8 Publication of liquidity forecast No 5.9 Dissemination of information on The central bank disseminates information on via its website

14 Page 14 Indonesia Bank Indonesia (BI) 1 Legal framework for monetary policy-making 1.1 Name and legal status of monetary policy-making entity The Board of Governor is responsible for monetary policy 1.2 Size and composition of monetary policy committee 1.3 Appointment of members (length of term, renewability) 1.4 Process of decision-making & voting rights By law, the monetary committee consists of 7 members, but currently has 6 members. There are no representatives of government The members are appointed by the People s Representative Council for a 5-year term. They can be appointed for a maximum of 2 terms (10 years) Consensus 1.5 Frequency of policy meetings Monthly for policy rate, weekly for monetary operation (eg liquidity management) 1.6 Pre-scheduling of meetings 2 Monetary policy mandate 2.1 Major mandate(s) Price stability and exchange rate stability (in relation to monetary policy) 2.2 Monetary policy target Inflation 2.3 Legal status and involvement of The policy target is determined by government and Bank Indonesia government 2.4 Target indicator, time frame Target range for inflation measured on basis of CPI annual basis 2.5 Disclosure of performance The perrformance of CB with regard to monetary policy mandate is disclosed through quarterly Monetary Policy Report to parliament 3 Monetary policy implementation 3.1 Policy signal Policy rate 3.2 Operational target Interbank overnight rate 3.3 Standing facilities Yes Forms & maturity Loans and deposits: both overnight Pricing method Fixed rates above policy rate (for lending) and below key policy rate (for deposit) Access limits No limit on deposits, lending limited by collateral Corridor width 175 bps for deposit and 0 bps for lending 3.4 Reserve requirements yes Reserve ratios 8 % % + subject to bank's LDR Reserve base Cash + Govt Bond + CB bills Averaging Yes Carry-over Yes or no Length and beginning of maintenance 2 weeks period Remuneration Yes Remuneration of excess reserves Yes or no Reserve holdings Current account holdings with CB, vault cash

15 Page 15 4 Market 4.1 Main OMO Functions Liquidity injection or withdrawal Types of operation Repo and reverse repo, outright purchases, deposits Maturity of 2 days 12 months Frequency of Daily, weekly, monthly Pricing method 4.2 Other discretionary Functions Types of operation Maturity of Frequency of Pricing method 4.3 Collateral Are central bank facilities subject to collateral? Yes, only for liquidity-providing Eligible collateral for standing facility Govt bonds and CB bills Eligible collateral for open market Govt bonds and CB bills Discretion of central bank to expand/ limit collateral types Risk control measures 5 Monetary Policy Communication 5.1 Announcement of policy decision Yes 5.2 Timing and media channel used Same day, two hours after meeting; via press release on CB website and Bloomberg and press conference 5.3 Key content of policy announcement Policy rate announcement and the background information 5.4 Explanation of decision The background to the policy rate announcement is described in a press release available at official website of Bank Indonesia 5.5 Associated documents Press release and monthly Monetary Policy Review available at official website of Bank Indonesia 5.6 Publication of minutes No 5.7 Publication of economic/inflation Yes forecasts 5.8 Publication of liquidity forecast 5.9 Dissemination of information on Are volumes and prices published? Yes. Through which channel is information published? Central bank s website.

16 Page 16 Iran Central Bank of Iran 1 Legal framework for monetary policy-making 1.1 Name and legal status of monetary Money and Credit Council (MCC) policy-making entity 1.2 Size and composition of monetary policy committee Central bank representatives and government representatives 1.3 Appointment of members (length of term, renewability) 1.4 Process of decision-making & voting rights The President of the central bank is the chairman of the MCC. Other members are appointed by the government. No fixed appointment term for MCC members Simple majority. Governor has casting vote 1.5 Frequency of policy meetings Annually and as required 1.6 Pre-scheduling of meetings Dates fixed in advance 2 Monetary policy mandate 2.1 Major mandate(s) Monetary stability (in relation to monetary policy) 2.2 Monetary policy target Monetary aggregates 2.3 Legal status and involvement of Money and Credit Council (MCC) government 2.4 Target indicator, time frame Target range for monetary aggregates measured on basis of monetary base and M2 over medium term 2.5 Disclosure of performance Regular reports on CB website 3 Monetary policy implementation 3.1 Policy signal Interbank market rate and claims on banks 3.2 Operational target Interbank overnight rate 3.3 Standing facilities Yes Forms & maturity Loan and deposits Pricing method Security collateral price accepted by Central Bank of Iran Access limits Collateralised (no limits) Corridor width Not applicable 3.4 Reserve requirements Yes Reserve ratios 17 % on demand deposits (10 % to 15.5 %) on time deposits 10 % on savings deposits Reserve base Deposit liabilities Averaging Yes Carry-over No Length and beginning of maintenance 1 week period Remuneration Yes Remuneration of excess reserves No Reserve holdings Current account holdings with CB, vault cash

17 Page 17 4 Market 4.1 Main CB participation paper Functions Liquidity absorption Types of operation Absorbing Liquidity Maturity of 1 year Frequency of As required Pricing method According to inflation rate 4.2 Other discretionary Deposits in the interbank market Functions Liquidity injection Types of operation Deposits Maturity of 1 to 9 months Frequency of As required Pricing method According to Inflation rate 4.3 Collateral No Eligible collateral for standing facility Eligible collateral for open market Discretion of central bank to expand/ limit collateral types Risk control measures 5 Monetary Policy Communication 5.1 Announcement of policy decision Yes 5.2 Timing and media channel used Via press release on CB website 5.3 Key content of policy announcement Change in interest rate 5.4 Explanation of decision To the public, via press release on CB website 5.5 Associated documents Monetary, Credit, and Supervisory Policies of the Banking System Packages 5.6 Publication of minutes Yes 5.7 Publication of economic/inflation No forecasts 5.8 Publication of liquidity forecast No 5.9 Dissemination of information on Yes

18 Page 18 Nepal Nepal Rastra Bank (NRB) 1 Legal framework for monetary policy-making 1.1 Name and legal status of monetary NRB Board of Directors policy-making entity 1.2 Size and composition of monetary policy committee 7 members 1.3 Appointment of members (length of term, renewability) 1.4 Process of decision-making & voting rights Government of Nepal appoints the board members for 5 years term. They can be re-appointed Simple majority 1.5 Frequency of policy meetings At least once a month, additional ad hoc meetings if necessary 1.6 Pre-scheduling of meetings Fixed but can be subject to change if deemed necessary 2 Monetary policy mandate 2.1 Major mandate(s) Price stability, external sector stability and financial sector stability (in relation to monetary policy) 2.2 Monetary policy target Monetary aggregates 2.3 Legal status and involvement of Board of Directors government 2.4 Target indicator, time frame Operating target: excess liquidity of banks and financial institutions (weekly), intermediate target: M2 growth (monthly) 2.5 Disclosure of performance Announcement of yearly monetary policy document, bi-annual review of monetary policy, publication of monthly report of macroeconomic indicators 3 Monetary policy implementation 3.1 Policy signal Key policy rates such as bank rate, CRR 3.2 Operational target Excess liquidity of banks and financial institutions 3.3 Standing facilities Yes Forms & maturity Loans Pricing method At Bank Rate Access limits Limit at discretion of central bank Corridor width Corridor system has not yet been introduced. 3.4 Reserve requirements Yes Reserve ratios Different ratio for commercial banks, development banks and finance companies Reserve base Deposit liabilities Averaging Yes Carry-over Length and beginning of maintenance 1 week period Remuneration No Remuneration of excess reserves No Reserve holdings Yes

19 Page 19 4 Market 4.1 Main Open market Functions Liquidity management (injection and withdrawal) Types of operation Repo, reverse repo, outright sale and outright purchase Maturity of Maximum maturity period of repo and reverse repo is 28 days Frequency of Weekly Pricing method Rate fixed by bidding 4.2 Other discretionary Standing liquidity facility Functions Injection Types of operation Lending to banks Maturity of 5 days Frequency of As required Pricing method At bank rate 4.3 Collateral Yes. Collateral is required for open market Eligible collateral for standing facility Government securities (such as T-bills, development bonds..) Eligible collateral for open market Government securities (such as T-bills, development bonds..) Discretion of central bank to expand/ No limit collateral types Risk control measures The central bank is not allowed to hold government securities exceeding 10 % of the previous year s government revenue 5 Monetary Policy Communication 5.1 Announcement of policy decision Yes 5.2 Timing and media channel used Monetary policy document is published publicly at the beginning of each fiscal year (mid-july) and mid-term review of monetary policy is announced half yearly. 5.3 Key content of policy announcement Key policy rates, financial programs, regulatory measures, etc. 5.4 Explanation of decision Most of the decisions are made public through reports, websites and press conferences, etc. 5.5 Associated documents Monetary Policy Report and its half-yearly review 5.6 Publication of minutes No 5.7 Publication of economic/inflation Yes forecasts 5.8 Publication of liquidity forecast No 5.9 Dissemination of information on Policy reports, bulletins and monthly statistical reports are published via website, tv, newspapers, etc.

20 Page 20 Russian Federation Bank Of Russia (CBR) 1 Legal framework for monetary policy-making 1.1 Name and legal status of monetary Board of Directors policy-making entity 1.2 Size and composition of monetary policy 15 members; CBR representatives only committee 1.3 Appointment of members Parliament; every 5 years; yes (length of term, renewability) 1.4 Process of decision-making & voting Simple majority; quorum is 8 persons rights 1.5 Frequency of policy meetings Monthly 1.6 Pre-scheduling of meetings Yes 2 Monetary policy mandate 2.1 Major mandate(s) Price stability (in relation to monetary policy) 2.2 Monetary policy target Inflation rate 2.3 Legal status and involvement of Board of Directors and parliament the policy target is stated in the law government 2.4 Target indicator, time frame On a CPI basis, YoY 2.5 Disclosure of performance Regular reports, hearings and apperances before parliament 3 Monetary policy implementation 3.1 Policy signal Kkey policy rate 3.2 Operational target Interbank overnight rate 3.3 Standing facilities Yes Forms & maturity Loans, deposits, FX swaps and repos: all overnight Pricing method Fixed rates above and below key rate interest rate corridor Access limits Lending limited by collateral Corridor width 200 bp 3.4 Reserve requirements Yes Reserve ratios Single ratio Reserve base Loans Averaging Yes Carry-over No Length and beginning of maintenance 1 month period Remuneration Yes Remuneration of excess reserves No Reserve holdings Current account holdings with CB, vault cash

21 Page 21 4 Market 4.1 Main Functions Liquidity injection Types of operation Repo auctions Maturity of 1 week Frequency of Weekly Pricing method Dutch auction 4.2 Other discretionary Functions Liquidity injection, liquidity withdrawal Types of operation Loans secured by non-marketable assets Maturity of 3 month Frequency of Quaterly Pricing method Auctions 4.3 Collateral Yes, liquidity-providing only Eligible collateral for standing facility Assets included into the Bank of Russia Lombard List; currency; non-marketable assets Eligible collateral for open market Assets included into the Bank of Russia Lombard List; non-marketable assets Discretion of central bank to expand/ limit collateral types Risk control measures Haircut 5 Monetary Policy Communication 5.1 Announcement of policy decision Yes 5.2 Timing and media channel used Via press release on CBR website 5.3 Key content of policy announcement Change in operational target 5.4 Explanation of decision Press release 5.5 Associated documents Press release 5.6 Publication of minutes No 5.7 Publication of economic/inflation No forecasts 5.8 Publication of liquidity forecast Yes 5.9 Dissemination of information on Yes, CBR website For instance, assets are included and excluded from the Bank of Russia Lombard List depending on their issuers current financial status

22 Page 22 Sri Lanka Central Bank of Sri Lanka (CBSL) 1 Legal framework for monetary policy-making 1.1 Name and legal status of monetary policy-making entity 1.2 Size and composition of Monetary Board committee 1.3 Appointment of members (length of term, renewability) 1.4 Process of decision-making & voting rights The Monetary Board is the monetary policy decision making authority in Sri Lanka and the Monetary Board is guided by the Monetary Policy Committee, which is headed by the Deputy Governor responsible for price stability. Chairman: Governor of the Central Bank of Sri Lanka Members: Secretary to the Ministry of Finance (ex-officio) and three other members appointed by the President on the recommendation of Minister of Finance, with the concurrence of the Constitutional Council Governor: Six years, renewable, Appointed members: Six years, renewable Concurrence of at least three members 1.5 Frequency of policy meetings Once a month 1.6 Pre-scheduling of meetings Dates for the next meeting announced at the previous meeting 2 Monetary policy mandate 2.1 Major mandate(s) Economic and Price Stability (in relation to monetary policy) 2.2 Monetary policy target Short Term Interest rate, Reserve Money, Monetary aggregate, M2 b and final target is price stability. 2.3 Legal status and involvement of Monetary Policy targets determened by the Monetary Board government 2.4 Target indicator, time frame 1. Short Term Interest Rate- Short term, 2. Reserve Money, Monetary Aggregates- Medium term, 3. Inflation- Over one year 2.5 Disclosure of performance CBSL Annual Report, hearings, appearances before parliament, through press releases, press statements, monthly bulletin, news surveys,other publications and CBSL website 3 Monetary policy implementation 3.1 Policy signal Changing standing rates of the Central Bank 3.2 Operational target Short term interest rate within the standing rate corridor (Rserve money as a indicative measure) 3.3 Standing facilities Yes Forms & maturity Lendings and deposits (both overnight) Pricing method Fixed rate; (Currently; Lending 8%, Deposit 6.5%) Access limits No limit on deposits & lending Corridor width 150 bp 3.4 Reserve requirements Yes Reserve ratios 6 % Reserve base Total Rupee Deposit Liabilities Averaging Yes Carry-over No Length and beginning of maintenance Two period per month (1st 15th) (16th Month end) period Remuneration No Remuneration of excess reserves No Reserve holdings Current account holdings with CB

23 Page 23 4 Market 4.1 Main Open market Functions Liquidity injection and absorption Types of operation Repo and reverse repo (Short term and overnight) Maturity of Overnight to 7 days Frequency of Weekly and Adhoc Pricing method Variable rate tender 4.2 Other discretionary Liquidity injection and absorption (Permanent and adhoc) Functions Liquidity injection/absorption to address liquidity fluctuation Types of operation Term Repo and reverse repo (Maturity more than one week), Outright purchase and sales,fx Swaps Maturity of Fixing of maturity by Market Operation Committee depends on the market Liquidity estimates Frequency of Adhoc Pricing method Variable rate tender 4.3 Collateral Eligible collateral for standing facility Treasury Bills and Treasury Bonds Eligible collateral for open market Treasury Bills and Treasury Bonds/ Central Bank Securities Discretion of central bank to expand/ limit collateral types Central bank has the discretion to extend the eligible collateral depending on the market condition Risk control measures Haircuts on security pricing 5 Monetary Policy Communication 5.1 Announcement of policy decision Yes 5.2 Timing and media channel used Central Bank Website, Other electronic platforms and News papers 5.3 Key content of policy announcement Change in policy rates and the rationale for such change 5.4 Explanation of decision Press release on central bank website 5.5 Associated documents Press release on central bank website 5.6 Publication of minutes No 5.7 Publication of economic/inflation Yes forecasts 5.8 Publication of liquidity forecast No 5.9 Dissemination of information on Volumes and Prices are published on Central Bank Web Site

24 Page 24 Ukraine National Bank of Ukraine (NBU) 1 Legal framework for monetary policy-making 1.1 Name and legal status of monetary policy-making entity Council of the National Bank of Ukraine 1.2 Size and composition of monetary policy committee 1.3 Appointment of members (length of term, renewability) 1.4 Process of decision-making & voting rights 7 members appointed by the President of Ukraine, 7 members appointed by the Verkhovna Rada of Ukraine. Chairman of the National Bank of Ukraine is part of the Council of the National Bank by virtue of his position Term of members appointment is seven years, except of the Chairman of the National Bank. The same person can be the member of Council twice. Simple majority 1.5 Frequency of policy meetings At least once every quarter 1.6 Pre-scheduling of meetings The activities of the Council of the National Bank of Ukraine are organised according to the regulation governing the Council of the National Bank of Ukraine 2 Monetary policy mandate 2.1 Major mandate(s) (in relation to monetary policy) The main objective of monetary policy is to ensure the stability of Ukraine s national currency 2.2 Monetary policy target The key measure of successful monetary policy implementation is a low and steady rate of inflation (measured by the consumer price index) over the medium term (between 3 and 5 years) 2.3 Legal status and involvement of Council of the National Bank of Ukraine government 2.4 Target indicator, time frame In the annual consumer price index growth rate must stabilize within the 4 6 % range and must subsequently maintained within the 3 5 % range beginning from Disclosure of performance Detailed explanations of the National Bank s motives and actions in the money market regulation sphere are provided both immediately after the relevant resolutions have been passed (press releases, video addresses, etc.) and in the generalised form of official analytical and forecast documents of the National Bank of Ukraine which are regularly posted on the National Bank s official website. If deviation of the year-onyear consumer price index growth rates from target parameters is be observed during six months in a row, the National Bank publishes on its official website explanations of the reasons causing these deviations and information about the measures taken to bring the consumer price index into conformity with target parameters 3 Monetary policy implementation 3.1 Policy signal Discount rate 3.2 Operational target Until the interest rate attains a proper degree of effectiveness, the quantitative indicators of the money supply will play the leading role in the process of implementing monetary policy. The operational benchmarks of monetary policy include monetary criteria of effectiveness and indicative goals of the IMF s Standby Arrangement, with amendments to be made during subsequent revisions 3.3 Standing facilities Yes Forms & maturity Overnight loans, overnight CD sales Pricing method National Bank sets interest rates according to the market situation Access limits Loans: corrateral and blank. National Bank can set maximum size of overnight loans Corridor width

25 Page Reserve requirements Yes Reserve ratios National currency 0, foreign currency Reserve base Attracted funds Averaging Yes for current accounts Carry-over Length and beginning of maintenance 1 month period Remuneration Yes for separate accounts Remuneration of excess reserves No Reserve holdings Current accounts and separate accounts with CB 4 Market 4.1 Main Functions Lliquidity injection/withdrawal Types of operation Collateralised lending at refinancing rate/cd sale at CD rate Maturity of Up to 14 days, up to 90 days, up to 360 days / up to 90 days Frequency of 3 Wednesdays running, 1 Wednesday, sometimes/every Thursday Pricing method National Bank sets interest rates according to the market situation 4.2 Other discretionary Functions Liquidity injection/withdrawal Types of operation Repo, outright purchases of Ukrainian government bonds/reverse repo, sales of Ukrainian government bonds, sales of Ukrainian government bonds with mandatory guarantee of repurchase at any time Maturity of Repo, reverse repo: up to 90 days Frequency of Non-regular Pricing method National Bank sets interest rates according to the market situation 4.3 Collateral Liquidity-providing is the subject to collateral Eligible collateral for standing facility Government bonds, CDs Eligible collateral for open market Discretion of central bank to expand/ limit collateral types Risk control measures 5 Monetary Policy Communication 5.1 Announcement of policy decision 5.2 Timing and media channel used 5.3 Key content of policy announcement 5.4 Explanation of decision 5.5 Associated documents 5.6 Publication of minutes 5.7 Publication of economic/inflation forecasts 5.8 Publication of liquidity forecast 5.9 Dissemination of information on Government bonds, CDs, state mortgage institution bonds, foreign currency, mortgage bonds, municipal bonds, corporate bonds, bills of exchange, guarantee of a resident bank, property rights for bank loan agreement with the chief administrator of the state or local budget, funds which are state guaranteed National Bank on a quarterly basis determines and announces the list of securities that may be collateral of refinancing loans

26 Page 26 3 List of participants Mr Harry Aginta Head of Section Economics and Monetary Policy Department Bank Indonesia Mr Sajjad Mehdizadeh Deputy Head of Department Economic Research & Policies Dept Central Bank of the Islamic Republic of Iran Mr Goran Atlija Expert Monetary Operations Department Croatian National Bank Mr Ismail Okour Deputy Head of Department Open Market Operations Central Bank of Jordan Mr Nihar Ranjan Biwas Deputy General Manager Department of Research Bangladesh Bank Dr Dilli Ram Pokhrel Deputy Head of Division Research Department Central Bank of Nepal Mr Vadim Grishchenko Expert Monetary Policy Department Central Bank of the Russian Federation Mr Georges Henry Deputy Governor Board Bank of the Republic of Haiti Ms Sriyani Hiththatiya Liyanage Jayamanne Senior Expert Domestic Operations Department Central Bank of Sri Lanka Ms Jean Quin Expert Financial Markets Central Bank and Financial Services Authority of Ireland Mr Demetris Staphylaris Expert Monetary Policy Implementation Section Central Bank of Cyprus Ms Jana Struhárová Specialist in monetary policy Settlement Department National Bank of Slovakia

27 Page 27 Mr George Tsvetkov Expert Bank Policy Directorate Money Instruments Bulgarian National Bank Ms Tetiana Yerlina Senior Expert Monetary Policy National Bank of Ukraine Mr Stephen Zammit Expert Monetary Operations & Collateral Management Central Bank of Malta

28 Deutsche Bundesbank Centre for Technical Central Bank Cooperation Wilhelm-Epstein-Straße Frankfurt am Main, Germany Internet: