Liquidity ‘unevenly distributed’

LIQUIDITY remains high and unevenly distributed among banks, Bank of PNG Governor Loi Bakani says.
Bakani said this in the bank’s Quarterly Economic Bulletin (September Quarter 2019) released yesterday
He said this had resulted in frequent borrowing in the inter-bank market and from the Repo Facility during the quarter.
Bakani said the Central Bank utilised its open market operation (OMO) instruments in the conduct of monetary policy to manage liquidity.
“There was a net retirement in Central Bank Bills (CBBs) of K944.3 million, while there was a net issuance in Treasury bills and Treasury bonds of K205.2 million and K200 million respectively, in the September quarter of 2019,” he said.
“The Central Bank support in the foreign exchange market also assisted in diffusing kina liquidity during the period.   The cash reserve requirement (CRR) for the commercial banks was maintained at 10.0 per cent during the quarter.
“The average level of broad money supply increased by 1.4 per cent in the September quarter, following a decrease of 0.9 per cent in the June quarter of 2019.
“This outcome was due to an increase in the average net domestic assets of the banking system, which more than offset a decline in average net foreign assets (NFA).
“Average net domestic claims outstanding, excluding net claims on the central government, increased by 2.3 per cent in the September quarter, following an increase of 1.8 per cent in the June quarter of 2019.
“The net foreign asset of the financial corporations (FCs), comprising depository corporations (DCs) and other financial corporations (OFCs), decreased by 3.4 per cent to K7,951.7 million in the September quarter of 2019.”