scholarly journals Treasury Bills And/Or Central Bank Bills for Absorbing Surplus Liquidity: The Main Considerations

2012 ◽  
Author(s):  
Obert Nyawata
Keyword(s):  
Central Bank ◽  
Treasury Bills

scholarly journals TREASURY BILLS AND/OR CENTRAL BANK BILLS FOR ABSORBING SURPLUS LIQUIDITY: THE MAIN CONSIDERATIONS

2013 ◽  
Vol 04 (02) ◽  
pp. 1350011
Author(s):  
OBERT NYAWATA
Keyword(s):  
Central Bank ◽  
Banking System ◽  
Central Banks ◽  
Market Development ◽  
Practical Reasons ◽  
Treasury Bills ◽  
Positive Externalities ◽  
Excess Liquidity ◽  
Challenging Question ◽  
Transmission Of Monetary Policy

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 of the 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.

scholarly journals Do the Monetary Policy Makers Follow Rules? Testing Taylor’s Rule for Nepal

2019 ◽  
Vol 42 (1-2) ◽  
pp. 34-42
Author(s):  
Khagendra Katuwal
Keyword(s):  
Interest Rate ◽  
Central Bank ◽  
Time Series Data ◽  
Consumer Price Index ◽  
Least Square Method ◽  
Least Square ◽  
Series Data ◽  
Output Gap ◽  
Treasury Bills ◽  
Augmented Dickey Fuller

The study estimates Taylor’s rule for Nepal by using the annual time series data for the period of 1988-2018. As a requirement of Taylor's rule, the output gap has been estimated by using Hodric-Perscott filter. Consumer price index has been used as measure of inflation and 91-days treasury bills rate is taken as the proxy for the short-term interest rate set by central bank of Nepal. The ordinary least square method has been used to estimate the Taylor's equation The results show that. As Augmented Dickey-Fuller test shows that all  the variables used in this study are in level form. The results show that there is a positive relationship of T-bills rule with inflation output gap. Interest rate smoothing is found to be a major concern of central bank of Nepal but follows the Taylor’s rule partially.

Money Market Instruments and Nigeria Inflation Rate: A Time Series Study

2018 ◽  
Vol 2 (2) ◽  
pp. 1-13
Author(s):  
Philip Umasom
Keyword(s):  
Gross Domestic Product ◽  
Central Bank ◽  
Inflation Rate ◽  
Money Market ◽  
Least Square ◽  
Domestic Product ◽  
Causality Test ◽  
Policy Objective ◽  
Treasury Bills ◽  
Augmented Dickey Fuller

This study empirically examined the effectiveness of money market instruments on Nigerian inflation rate. The objective is to investigate the existing relationship between money market instruments and Nigerian inflation rate, data was sourced from Central Bank of Nigeria statistical bulletin. Multivariate model were formulated having Inflation Rate (INFR) as the function of Percentage of Treasury Bills to Gross Domestic Product (TB/GDP), Percentage of Stabilization Securities to Gross Domestic Product (STS/GDP), Percentage of Treasury Certificate to Gross Domestic Product (TC/GDP), Percentage of Eligible Development Stock to Gross Domestic Product (EDS/GDP), Percentage of Central Bank of Nigeria Short Term Fund to Gross Domestic Product (CBNSF/GDP) and Percentage of Call Money Scheme to Gross Domestic Product (CMS/GDP). The Ordinary Least Square (OLS) properties of co integration, Augmented Dickey Fuller Unit Root, Granger Causality Test and Vector Error Correction Model (VECM) were employed to determine the relationship between the money market instruments and Nigerian inflation rate. Findings revealed that money market instruments are statistically significant in explaining variation in Nigerian inflation rate. We therefore recommend that the money market should well be structured, properly managed and its operational efficiency enhanced to achieve the monetary policy objective of price stability.

scholarly journals Portfolio Diversification and Performance of Deposit Money Banks: Analysing the Nigerian Banking Industry

2021 ◽  
pp. 12-27
Author(s):  
Ihejirika Peters Omeni ◽  
Aderigha Ades George
Keyword(s):  
Central Bank ◽  
Banking Industry ◽  
Portfolio Diversification ◽  
Foreign Investments ◽  
Treasury Bills ◽  
Return On Equity ◽  
Long Run ◽  
Short Run ◽  
And Performance ◽  
Nigerian Banking

The focus is on Portfolio Diversification and Performance of Deposit Money Banks: analyzing the Nigerian banking industry for the period 1990-2019. The study measured treasury bills, ordinary shares, investments in subsidiaries, and foreign investments outside Nigeria as proxies for Portfolio Diversification while Return on Equity as proxy for performance of deposit money banks for the periods under review. In the course of the study, data were obtained from the website of Central Bank Statistical bulletin and annual report of Nigerian Deposit Insurance Corporation (NDIC). The Augmented Dickey Fuller (ADF) test option was used to test for unit roots. The ARDL and Bounds test were used to estimate the short and long run relationships respectively. The study discovered that at short run, treasury bills, and ordinary shares are negatively related and not significantly related to return on equity while investments in subsidiaries and foreign balances outside Nigeria are positively related to return on equity of DMBs at most lag periods. However, it was further observed that at different lag periods the variables do not significantly predict the direction of return on equity of DMBs. Long run relationship was also observed to exist amid treasury bills, acquisition of ordinary shares, investment in subsidiaries, ,foreign investments outside Nigeria and performance of all deposit money banks in Nigeria for the period 1990 – 2019.at short run, DMBs should diversify into investments in subsidiaries , as this would improve return on equity. Deposit Money Banks should also diversify into foreign holdings that would yield positive net present values. Deposit money Banks in Nigeria should diversify into foreign investments with the right mix   that would increase performance. These were some of the recommendations proffered, to the Government, monetary authorities, Central Bank of Nigeria, researchers and Deposit Money Banks in Nigeria.

scholarly journals Interest Rate Pass-through in Pakistan: Evidence from Transfer Function Approach

2005 ◽  
Vol 44 (4II) ◽  
pp. 975-1001
Author(s):  
Abdul Qayyum ◽  
Sajawal Khan ◽  
Idrees Khawaja
Keyword(s):  
Interest Rate ◽  
Central Bank ◽  
Cost Of Capital ◽  
Real Income ◽  
Treasury Bills ◽  
Deposit Rate ◽  
Market Rate ◽  
Lending Rate ◽  
Pass Through ◽  
The Cost

The transmission of monetary policy through the interest rate mechanism has been thoroughly discussed in economic literature for quite some time. The traditional view is that, the change in real interest rate influences the cost of capital. The change in cost of capital affects the magnitude of investment and consumption and therefore the level of, real income and prices [Mishkin (1995)].1 Operationally the State bank of Pakistan, influences the yield on treasury bills (T-bills). This is done on the assumption that the yield on treasury bills influences other interest rates like the Money Market rate (Call money rate), banks’ deposit and banks’ Lending rates. The change in these rates influences the cost of capital and thus level of investment and consumption in the economy. Given this, the central bank can influence the yield on T-bills to influence the level of real income and the level of prices. The foregoing explanation of the monetary transmission mechanism makes it clear that if the changes in yield on the T-Bill rate are not passed on to the Call money rate and the bank deposit and the Lending rate then it becomes difficult for the central bank to use the channels that involve interest rate, for influencing the level of output and prices. Hence it is important to test whether the changes in the treasury bill rate are passed on to money market rate, bank deposit rate and the bank lending rate and if yes at what speed and to what extent. Therefore this study examines the pass-through of the changes in Treasury bill rate to Call Money rate, Banks’ deposit rate and Banks’ Lending rate.

scholarly journals Islamic Monetary Policy and Rastin Swap Bonds

2019 ◽  
Vol 3 (2) ◽  
pp. 1-16
Author(s):  
Bijan Bidabad
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Commercial Banks ◽  
Foreign Currency ◽  
Central Banking ◽  
Open Market ◽  
Financial Policies ◽  
Treasury Bills ◽  
The Right ◽  
Banking Operations

Purpose: This paper aims to examine monetary instruments in Islamic central banking framework. As a conclusion, to revive Islamic monetary policy, we should provide some public equity-based instrument as a necessary replacement for conventional bonds and treasury bills to activate non-usury open market operations. Design: We define a type of new negotiable bond as: “Rastin Swap Bonds (RSBs)”, which is based on swapping money between two persons for two different periods. Findings: RSB is a financial paper that observes the right for the lender to borrow an equal amount to his lending from the borrower. Four types of RSBs in domestic money and foreign currency are defined, and their Sharia allowances and monetary, fiscal, and financial effects are evaluated. Research limitations: This bond is a novel design, and it is required to be more elaborated for further practical development and adjustment. Practical implications: Islamic central banking is not different from conventional central banking as a whole, but the role of an Islamic central bank in conducting monetary policy is restricted to use interest-free monetary instruments in an environment that commercial banks are obliged to implement non-usury banking operations. Social implications: Islamic financial instruments should be usury-free and efficient in applying monetary, fiscal, and financial policies at different levels of the central bank, government and commercial banks and non-banking money and financial institutions. Rastin Swap Bond will serve as an important instrument for resource mobilization and will be a primary vehicle for the development of the Islamic capital market and central banking operations. Originality/value: Conventional interest-bearing bonds are not allowed in Islamic central banking. This restriction mostly distinguishes Islamic central banking from the conventional one in implementing monetary policy. Article Type: Technical paper JEL: G21, G28, H81

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