Publication Date 21.02.2013
1.1. Open market operations
Interventions in the money market in 2012 Q3 consisted in open market operations to inject and withdraw liquidity.
The total amount of injected liquidity was almost unchanged from the average of ALL 17.2 billion in 2012 Q2, reaching ALL 17.8 billion, on average, in 2012 Q3.
The average injected liquidity is about 22% lower, from ALL 23 billion a year earlier.
To inject liquidity, the Bank of Albania employed its main instrument, the one-week reverse repurchase agreement, at an average of ALL 14.61 billion per week.* In the first three weeks, the three-month reverse repurchase agreements were used while its place in the following weeks was taken by the one-month reverse repurchase agreements.
Given the more frequent re-investment, characteristic of the monthly injection, which facilitates the use of this instrument in parallel with the main market operation, at the end of July, the three-month reverse repurchase agreements began to be replaced by the one-month reverse repurchase agreement, which was used in ten cases, reaching on average ALL 2.1 billion per auction.*
To withdraw excess liquidity, on 20-23 August 2012, which coincided with the last days of the required reserve period, the overnight repurchase agreement was used, on average ALL 1.12 billion* per auction.
On the opposite direction, to compensate for the liquidity shortfall in the system, during the last days of the required reserve period, on 23 July and 19-21 September 2012, the overnight reverse repurchase agreement was used in five cases, on average ALL 1.40 billion* per auction.
Following structural operations of the open market in the first half of the year, when the net portfolio of the Bank of Albania increased ALL 6.01 billionx, as anticipated, during the third quarter, the sterilisation of this effect started on maturities in the primary market. The reinvestment of the Bank of Albania portfolio for the third quarter was down ALL 1.40 billion*, mainly concentrated in 3 and 6-month T-bills, while ALL 4.61 billion are expected to reach their maturity term in the primary market during the last quarter of the year.
1.2. Use of standing facilities
During 2012 Q3, the overnight deposit facility was used in 65 cases in total, on average ALL 6.95 billion, almost ALL 2.44 billion higher than in the previous quarter, when this instrument was used in 42 cases recording an average of ALL 4.51 billion.
The overnight credit facility was more frequently employed than in the previous quarter concentrating mostly around the last days of the required reserve period, especially during 20-23 July 2012. During the third quarter, this instrument was used in 5 cases, on average ALL 1.08 billion.
The following chart provides an overview of the Bank of Albania interventions in the money market for 2011-2012