The role of government securities as monetary instruments in open market operations
Download
1 / 10

The Role of Government Securities as Monetary Instruments in Open Market Operations - PowerPoint PPT Presentation


  • 299 Views
  • Uploaded on

The Role of Government Securities as Monetary Instruments in Open Market Operations. Dr Miranda Goeltom Deputy Governor Bank Indonesia 25 July 2000. Overview. Introduction Macro Environment of the Indonesian Government Bond Market Current Implementation of Monetary Policy

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'The Role of Government Securities as Monetary Instruments in Open Market Operations' - casper


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
The role of government securities as monetary instruments in open market operations l.jpg

The Role of Government Securities as Monetary Instruments in Open Market Operations

Dr Miranda Goeltom

Deputy Governor

Bank Indonesia

25 July 2000


Overview l.jpg
Overview Open Market Operations

  • Introduction

  • Macro Environment of the Indonesian Government Bond Market

  • Current Implementation of Monetary Policy

  • Government Bonds as OMO Instruments

  • Government Bonds as Market Development Instruments

  • Conclusion


Introduction l.jpg
Introduction Open Market Operations

  • Rationale for bank recapitalisation programme

  • Need for an active bond market

    • Liquidity for restructured banks

    • Reduced dependence on international capital

    • Infrastructure for development of domestic debt market


Current indonesian government bond market l.jpg
Current Indonesian Government Bond Market Open Market Operations

  • Fixed rate bonds (Rp126 trillion)

    • 5 series

    • Coupons 12-14%

    • Maturities 5-10 years

  • Variable rate bonds (Rp227 trillion)

    • 16 series

    • Coupons determined from SBI rates

    • Maturities 2-9 years


Emergence from economic crisis of 1997 98 l.jpg

Rupiah exchange rate Open Market Operations

Jan-00

Rolling 12-month GDP

Emergence from economic crisis of 1997/98

Improving economic performance

Inflation and SBI rates

Monthly exports


Current implementation of monetary policy l.jpg
Current Implementation of Monetary Policy Open Market Operations

  • Objectives

    • Fulfilment of monetary targets

    • Signalling policy intentions

  • Use of SBI for monetary policy operations

  • Constraints

    • Relationship between base money and the inflation rate

    • Financial markets not well developed

  • Inflation targeting as an alternative approach?


Government bonds as omo instruments l.jpg
Government Bonds as OMO Instruments Open Market Operations

  • Use of SBI as monetary policy instrument poses a conflict of interest for Bank Indonesia

  • Need for a sovereign benchmark yield curve

  • Move to T-bills requires planning in the areas of

    • Overall level of government debt

    • Use of funds raised by issuance of T-bills

    • Homogeneity of sovereign debt market

    • Yield curve development strategy


Sbi and base money l.jpg
SBI and Base Money Open Market Operations


Bonds as market development instruments l.jpg
Bonds as Market Development Instruments Open Market Operations

Operation of the Benchmark Yield Curve

Impact onreal sector

Interest rate

Intermediation byfinancial markets

Focus of

central bank

attention

Maturity


Bond market development initiatives l.jpg
Bond Market Development Initiatives Open Market Operations

  • Scripless registry for SBI and government bonds

  • “Delivery versus Payment” clearing and settlement system

  • Support for Repo transactions

  • Appointment of Primary Dealers/Market Makers

  • Formation of Debt Management Unit at Ministry of Finance


ad