Government Securities Versus Central Bank Securities in Developing Open Market Operations

Government Securities Versus Central Bank Securities in Developing Open Market Operations PDF

Author: Mr.Marc Quintyn

Publisher: International Monetary Fund

Published: 1994-05

Total Pages: 66

ISBN-13:

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In an indirect monetary policy framework, open market operations become the central bank’s main instrument. In the initial stages, when financial markets are still undeveloped, selection of a financial instrument for those operations and the design of supporting arrangements to ensure the central bank’s operational autonomy when using the instrument, are crucial issues. Based on theoretical arguments and experience of a sample of countries that embarked on financial reforms, this paper argues that government securities are the preferred instrument because of their better capacity to develop financial markets. The use of government securities, however, requires the most complex supporting arrangements.

Treasury Bills and/Or Central Bank Bills for Absorbing Surplus Liquidity

Treasury Bills and/Or Central Bank Bills for Absorbing Surplus Liquidity PDF

Author: Mr.Obert Nyawata

Publisher: International Monetary Fund

Published: 2012-01-01

Total Pages: 39

ISBN-13: 1463959370

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This paper discusses the challenging question of whether central banks should use treasury bills or central bank bills for draining excess liquidity in the banking system. While recognizing that there are practical reasons for using central bank bills, the paper argues that treasury bills are the first best option especially because positive externalities for the financial sector and the rest of the economy. However, the main considerations in the choice should be: (i) operational independence for the central bank; (ii) market development; and (iii) the strengthening of the transmission of monetary policy impulses.

Transformation of Markets and Policy Instruments for Open Market Operations

Transformation of Markets and Policy Instruments for Open Market Operations PDF

Author: Mr.S. H. Axilrod

Publisher: International Monetary Fund

Published: 1995-12-01

Total Pages: 98

ISBN-13: 1451856598

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As developing countries and economies in transition have relied on deregulated, competitive markets to spur growth, their central banks have shifted toward using open market operations as a tool of monetary policy. To be most effective, such operations require supportive changes in other policy instruments (reserve requirements, discount window), a competitive banking system and securities market, and adaptation of particular open market or market-type instruments used to the stage of, and potential for, market development. The paper assesses options available to a central bank for encouraging a competitive market architecture and designing instruments for implementation of open market operations.

The Federal Reserve System Purposes and Functions

The Federal Reserve System Purposes and Functions PDF

Author: Board of Governors of the Federal Reserve System

Publisher:

Published: 2002

Total Pages: 0

ISBN-13: 9780894991967

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Provides an in-depth overview of the Federal Reserve System, including information about monetary policy and the economy, the Federal Reserve in the international sphere, supervision and regulation, consumer and community affairs and services offered by Reserve Banks. Contains several appendixes, including a brief explanation of Federal Reserve regulations, a glossary of terms, and a list of additional publications.

The Microstructure of Government Securities Markets

The Microstructure of Government Securities Markets PDF

Author: Mr.Peter Dattels

Publisher: International Monetary Fund

Published: 1995-11

Total Pages: 106

ISBN-13:

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This paper applies the “market microstructure” literature to the specific features of government securities markets and draws implications for the strategy to develop government securities markets. It argues for an active role of the authorities in fostering the development of efficient market structures.

Primary Dealers in Government Securities

Primary Dealers in Government Securities PDF

Author: Mr.Marco Arnone

Publisher: International Monetary Fund

Published: 2005-02-25

Total Pages: 104

ISBN-13: 9781589063792

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In the past 10 years a growing number of countries have established or began establishing a primary dealer system. This paper discusses the role of primary dealers, as well as theoretical, operational, and technical issues related to the establishment of a primary dealer system, in the overall management of public debt for countries that may be considering taking this step. Drawing on a 2001 survey of country practices, the paper discusses the rationale, costs and benefits, and key prerequisites, as well as selection criteria, obligations, and privileges of a primary dealer system. It also attempts to determine the conditions under which a primary dealer system would make a positive contribution to the functioning and development of the government securities market.

Primary Dealers in Government Securities

Primary Dealers in Government Securities PDF

Author: Mr.Marco Arnone

Publisher: International Monetary Fund

Published: 2003-03-01

Total Pages: 66

ISBN-13: 1451846495

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In many countries, authorities have designated a group of financial firms as the principal intermediaries in the government securities market-referred to as "primary dealers" or a "primary dealer system." This paper discusses policy issues related to the establishment of a primary dealer system for countries that may be considering taking this step. In this regard, a key issue is whether a primary dealer system fits into the overall strategy for financial market development in the country. Under a primary dealer system, the debt manager and the group of primary dealers pursue a common strategy in support of the effective functioning and development of primary and secondary markets for government securities. This paper presents results of a survey of country practices conducted in early 2001. Among the countries surveyed, there was broad agreement among authorities that a primary dealer system is to be highly recommended.

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