Steps taken to maintain market depth, strengthen monetary policy transmission mechanism, support primary dealership system
The Central Bank of Turkey (CBRT) on Friday announced new measures to mitigate the economic impact of the global coronavirus pandemic, making additional adjustments in its outright purchase operations, it said in a statement.
On March 31, the Central Bank declared that for a temporary period, it would purchase government domestic debt securities (GDDS) bought by primary dealer banks from the country’s unemployment insurance fund.
Primary dealer banks can also increase the liquidity facility offered under Open Market Operations (OMO).
Accordingly, the CBRT took additional measures to maintain market depth, strengthen the monetary policy transmission mechanism and support the primary dealership system.
The maximum limit for the ratio of the OMO portfolio nominal size to total assets listed under the CBRT analytical balance sheet has been increased from 5% to 10%.
To further support the Primary Dealership system, the facility offered by the Central Bank to primary dealer (PD) banks to sell GDDS to the CBRT has been revised.
The bank noted that the limits offered to PD banks for outright sales of GDDS to the CBRT would be applied independent of the repo transaction limits and that PD banks would be offered a GDDS selling limit equal to repo transaction limits.
It said the related purchases would also be performed within the total maximum limit of 10% set for the OMO portfolio.
“The GDDS to be purchased and the amount of purchases will be determined by the CBRT and purchases will be conducted via the quantity auction method,” it noted.