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Proposed Changes to the Commonwealth's Short-term Funding Instrument – Treasury Notes

Treasury Notes are short-dated instruments issued by the Commonwealth Government through the Australian Office of Financial Management (AOFM) for the purposes of managing within-year mismatches in the timing of the Commonwealth's receipts and outlays. Treasury Notes also assist the Reserve Bank of Australia (RBA) in its liquidity management operations. Treasury Notes are currently issued in fixed-term maturities of 5, 13 and 26 weeks.

From early in the new financial year, the AOFM will cease the issue of Notes with these limited fixed-term maturities. Instead, Notes of variable-term maturities will be issued, with maturity dates designed, broadly, to
co-incide with peak Commonwealth revenue collection dates which occur in the months of January, April, July and October each year. The AOFM and Bank would also reserve the right, on occasion, to issue Treasury Notes to other dates which would promote efficient cash management.

The move will both provide for enhanced flexibility in the management of the Commonwealth's within year cashflows – providing for a better matching of peak cashflow dates to Note maturities – and allow for the consolidation of the Commonwealth's short-term financing instruments into comparatively few, more highly liquid, lines of stock at any one time.

It is expected that the new type of Note will be issued from around mid July. A further announcement will be made shortly before the first issue.

Further information can be obtained from:

Enquiries: Reserve Bank of Australia

Mr Frank Campbell
Head of Domestic Markets
Reserve Bank of Australia
(02) 9551 8300

Enquiries: Australian Office of Financial Management

Mr Mike Allen
Chief Executive Officer
Australian Office of Financial Management
(02) 6263 2713