Central Bank Monetary Operations

On Friday, 5 May 2006, the Central Bank of Malta conducted a seven-day term deposit auction, absorbing a total of Lm64.1 million, Lm5.2 million less than the Lm69.3 million that matured on the same day. The rate resulting from the 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 is currently conducting its term deposit auctions.

The net injection of funds was in response to a decline in bank liquidity in the week under review. Among the factors that contributed to this was the fact that credit institutions had started the week with a shortfall in their statutory reserve deposit accounts with the Central Bank of Malta.

In addition, there was a negative net clearing of cheques totalling Lm10.4 million mainly relating to customers' payments of provisional tax, the purchase of foreign currency by credit institutions valued at Lm1.3 million and currency withdrawals of Lm1.2 million. Partly offsetting these factors were net maturing Treasury bills amounting to Lm5 million, the sale of Lm4.4 million worth of Treasury bills in the secondary market and government direct credits relating to social security allowances amounting to Lm1.7 million.

Interbank market

During the week interbank activity increased, with turnover rising to Lm7.1 million, from Lm4.4 million in the previous week. Six deals were struck, all in the overnight tenor, at a weighted average interest rate of 3.123 per cent. This represented a decrease of 5.7 basis points from the rate at which similar deals were struck in the previous week.

Treasury bill market

In the primary market for Treasury bills, the Treasury invited tenders for 91-day bills maturing on 4 August 2006. From the Lm22.2 million worth of bids submitted, tenders for Lm8 million were accepted by the Treasury.

Since Lm13 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by Lm5 million, from Lm181.8 million to Lm176.8 million.

The latest three-month rate resulting from the week's Treasury bill auction was 3.2347 per cent, a decrease of 0.69 basis points from the rate on 91-day bills issued the previous week. This reflected a bid price of Lm99.2 per Lm100 nominal.

On Tuesday, the Treasury invited tenders for 182-day bills maturing on 10 November 2006. In the following week the Treasury will accept bids for 91-day bills maturing on 18 August 2006.

Turnover in the secondary market for Treasury bills amounted to Lm4.6 million, which was Lm0.9 million higher than the Lm3.7 million recorded in the previous week. The Bank, in its role of market-maker, effected net purchases of Lm4.3 million.

Malta Real-time Interbank Payment System (MaRIS)

During the month of April there were 3,736 payment messages processed through MaRIS, for a total value of Lm1,169.1 million. These can be divided in 1,624 customer payments for a value of Lm57.8 million and 2,112 interbank payments totalling Lm1,111.3 million. The daily volume average for the month under review was 197 messages for a value of Lm61.5 million. The peak day for the highest number of messages processed was 3 April 2006 with 250 messages. The highest value was registered on 28 April 2006 with Lm201.9 million.

Further details can be found on the Central Bank of Malta website: www.centralbankmalta.com