Central Bank Monetary Operations

On Thursday, 24 February 2005 the Governor of the Central Bank of Malta, following the monthly meeting with the Monetary Policy Advisory Council, decided to leave the Bank’s Central Intervention Rate unchanged at three per cent (see www.centralbankmalta.com).

The level of surplus liquidity in the banking system continued to decline in the week ended 25 February 2005. Credit institutions started the week under consideration with a shortfall in the reserve deposit accounts which they are legally bound to hold with the Central Bank. Furthermore, there were the net issue of Treasury bills amounting to Lm18.7 million, the purchase of foreign currency against the Maltese lira from the Central Bank by the credit institutions totalling Lm8.5 million as well as a negative clearing of cheques of Lm1.1 million that further reduced the banks’ liquidity. Partially offsetting these outflows from the banking system were government payments amounting to Lm13 million.

Accordingly, on Friday, 25 February the bank held its usual 14-day term deposit auction. An aggregate of Lm8.5 million was absorbed from the banking sector, Lm20.4 million less than the Lm28.9 million worth of term deposits that matured on the same day. Thus, the level of the banks’ outstanding term deposits at the Central Bank decreased from Lm49.4 million to Lm29 million. The rate resulting from the latest auction remained at 2.95 per cent, being the floor of the interest rate band (2.95-three per cent) at which the Bank conducts its term deposit auctions.

Interbank market

Interbank activity increased from the previous week’s level of Lm6 million to Lm9.7 million. One deal amounting to Lm2 million was conducted in the one-week tenor at a rate of 2.97 per cent, up by two basis points from the previous rate transacted on 11 February 2005. The other five deals, totalling Lm7.7 million, were effected in the two-week tenor at a weighted average rate of 2.9713 per cent, just 0.1 basis point up from the previous 14-day deal conducted on 7 January 2005.

Treasury bill market

In the primary market, the Treasury invited tenders for 91-day Treasury bills to mature on 27 May 2005 and 182-day Treasury bills to mature on 26 August 2005. The amount of bids submitted totalled Lm36.1 million, which were all accepted by the Treasury. Given that Lm20 million worth of bills matured during the week under review, the outstanding balance of Treasury bills increased by Lm16.1 million, from Lm242 million to Lm258.1 million.

The latest three-month rate resulting from this auction was 2.9740 per cent. This was 0.7 basis points higher than the previous 91-day rate for bills issued on 18 February 2005. This rate reflects a bid price of Lm99.2640 per Lm100 nominal. On the other hand, the latest six-month rate was 2.9854 per cent or 0.7 basis points higher than the previous 182-day rate for bills issued on 21 January 2005. This rate reflects a bid price of Lm98.5332 per Lm100 nominal.

Turnover in the secondary Treasury bill market amounted to Lm1.1 million, a decrease of Lm0.5 million from the previous week’s level of Lm1.6 million. All trading was effected by the Central Bank in its role as market-maker.

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BOV sponsors production of Ir-Rewwixta tal-Qassisin

Bank of Valletta was a main sponsor of the production Ir-Rewwixta tal-Qassisin, the 1980s original play by Maltese playwright Alfred Buttigieg. This play is a classic in Maltese literature and is also included in the Matsec syllabus.

Michael Galea, head of public relations at Bank of Valletta presented the sponsorship to Mr Fenech. He said, “BOV is delighted to be associated with this high quality drama production. BOV has always been at the forefront supporting the local performing arts scene. Our association with a production of such high calibre continues to consolidate BOV’s patronage of arts and culture in Malta. This production should also prove to be of interest to students who are studying the text as part of their syllabus for the Matsec exams. This should continue to add to the educational dimension of this production,” concluded Mr Galea.

Director Michael Fenech thanked Bank of Valletta for its sponsorship and said, “This production featured a highly talented cast with the likes of Manuel Cauchi, Joe Cortis, Philip Mizzi, Leigh-Anne Abela, Simon Zammit and Jesmond Tedesco Triccas. It was written with the intention of making the audience think, smile and laugh”.