MEDIA RELEASE No: 1999-05 Date: 21 June 1999 Embargo: For Immediate Release

YEAR 2000 AND RBA DOMESTIC DEALING ARRANGEMENTS

As part of their planning for the Year 2000, banks and other financial intermediaries are looking to put in place arrangements to ensure that they have adequate liquidity. To assist these intermediaries to achieve greater certainty about their liquidity flows around Year 2000, the Bank is willing, with immediate effect:

• to extend the term of the repos it undertakes in its market operations to span the start of the Year 2000; and
• to accept deposits from institutions with Exchange Settlement Accounts, for terms maturing around the start of the Year 2000. The deposits will pay a market rate of interest. Depositors will be able to redeem a deposit before maturity, although in that case an adjustment to the interest rate may be made to reflect the shorter maturity. The minimum deposit is $10 million. Institutions wishing to make a deposit may approach the Bank at any time for a quote.

More generally, as the Year 2000 approaches, the Bank will undertake market operations as necessary to ensure that market conditions remain consistent with the stance of monetary policy. Specifically, this will involve keeping interest rates in the overnight money market in line with the announced cash rate target. To the extent necessary, the Bank will supplement its operations in government securities by making greater use of foreign exchange swaps and by undertaking repos in bank bills or certificates of deposit of banks operating in Australia.

Enquiries:
Mr R Battellino
Assistant Governor (Financial Markets)
(02) 9551 8200

Mr F Campbell
Head of Domestic Markets
(02) 9551 8300