Surplus liquidity in the banking system continued its upward trend in the week under review. The main liquidity inducing factors were the sale of foreign currency against the Maltese lira by the credit institutions to the Central Bank of Malta amounting to Lm19.9m, net maturing Treasury bills amounting to Lm4.7m and direct government credits of Lm3.7m. Partially offsetting this increase in liquidity was a negative clearing of cheques amounting to Lm8m.
Accordingly, on Friday 2 September, the bank conducted a 14-day term deposit auction. An aggregate of Lm29.3m was absorbed from the banking sector, Lm8m more than the Lm21.3m worth of term deposits that matured on the same day. As a result, the Bank’s outstanding term deposits increased from Lm44.3m to Lm52.3m. The rate resulting from the latest auction was 3.20 per cent, being the floor of the interest rate band (3.20 per cent-3.25 per cent) at which the Bank conducts its auctions.
Interbank market
Interbank activity increased substantially in the week under review to Lm14.1m from the Lm3.3m transacted last week. Deals were transacted in the overnight, one and two week tenor. The only noticeable change was in the overnight tenor which was dealt at the rate of 3.23 per cent. This was 2 basis points lower than the previous overnight deal transacted on 12 August 2005.
Treasury bill market
In the primary market, the Treasury invited tenders for 91-day Treasury bills to mature on 2 December 2005. Only Lm7.9m of the Lm24.4m worth of bids submitted were accepted by the Treasury. Given that Lm12.6m worth of bills matured during the week under review, the outstanding balance of Treasury bills decreased by Lm4.7m, from Lm194.1m to Lm189.4m.
The latest three-month rate resulting from this auction was 3.2628 per cent. This was 0.04 basis points lower than the previous 91-day rate for bills issued on 19 August 2005. The latest rate reflects a bid price of Lm99.1931 per Lm100 nominal.
Turnover in the secondary market remained practically unchanged from the previous week’s level of Lm0.9m and amounted to Lm1.2m. All trading was effected by the Bank in its role of market-maker.
Malta real-time interbank
payment system (MaRIS)
MaRIS is a payment system, which started operating in 2002. It is used for same day real-time settlement of interbank obligations. The RTGS system is operated by the Central Bank of Malta (CBM) and managed by an Association of Participants. MaRIS allows same-day value payments in Lm through settlement accounts at the CBM in real-time, on an unconditional and irrevocable settlement basis. A payment is deemed as being final when the receiving participant’s account is credited.
MaRIS statistics for August
During the month of August, 4,056 payment messages were processed through MaRIS, for a total value of Lm839.4m. These can be divided in 1,623 customer payments for a value of Lm110.2m and 2,433 interbank payments totalling Lm729.2m.
The daily volume average for the month under review was 184 messages for a value of Lm38.2m. The peak day for both the highest number of messages processed, 293 and for value, Lm123.4m, was registered on 1 August.
Further details can be found on the Central Bank of Malta website: www.central bankmalta.com.