Central Bank bills auctions
The main function of this instrument is managing the liquidity of the banking system through selling short-term securities by the National Bank, on the primary market. The interest rate on the CB bills is the key interest rate, which determines the monetary policy stance.
CB bills auctions are conducted in regular intervals, and the amount of CB bills sold is determined depending on the short-term liquidity projections. All banks and saving houses which have an obligation to maintain reserve requirement are entitled to participate in the auctions.
CB bills auctions are held on the first day of the reserve requirement period, while their maturity date is determined in accordance with the the duration of the reserve requirement period.
National Bank applies two main types of tenders in the CB bills auction:
a) Interest rate tender: in the prospectus sent to the banks, National Bank announces the amount of CB bills offered for sale, and the banks bid with amounts and interest rates;
b) Volume tender: in the prospectus sent to the banks, National Bank announces fixed interest rate at which CB bills will be offered for sale, and the banks bid only with amounts.
CB bills may be traded on the secondary market and they serve as a collateral for credits from the central bank.
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