Media Release Changes to the Reserve Bank's Dealing Arrangements

With the declining stock of Commonwealth Government securities (CGS), the Reserve Bank has been reviewing aspects of its markets operations. As part of this, it has decided to widen the range of securities that it will accept as collateral for repurchase agreements and extend the term of CGS that it will be prepared to buy outright in the course of its daily liquidity management operations.

(a) Collateral for repurchase agreements

The range of securities that the Reserve Bank will accept as collateral for repurchase agreements will in future include Australian dollar denominated securities issued in Australia (and lodged in Austraclear) by supranational organisations. At present, this includes securities issued by the International Bank for Reconstruction and Development (IBRD), the Asian Development Bank (ADB) and the European Bank for Reconstruction and Development (EBRD). Decisions about eligible collateral from other supranational institutions will be made on a case-by-case basis. A precondition for accepting such securities will be that Australia is a member of the supranational organisation concerned.

(b) Outright Purchases of CGS

Because of the fall in the supply of short-term CGS, the Reserve Bank sees a need to lengthen the term to maturity of CGS that it will be prepared to buy outright during the course of its daily liquidity management operations. In future, the Bank will be prepared to buy securities with a remaining term to maturity of about
18 months, instead of the current maximum term of about 12 months.

Both of these changes will increase the range of assets available to the Reserve Bank for liquidity management purposes. They have no implications for the stance of monetary policy. They will become effective from
16 October 2000.