Central bank monetary operations

On Friday 2 February 2007, the Central Bank of Malta conducted a seven-day term deposit auction absorbing Lm140.3 million from the banking system. This was Lm12.8 million more than the Lm127.5 million that matured on the same day. The interest rate that resulted from the auction was 3.95%, which is the floor of the interest rate band at which the bank is currently conducting its term deposit auctions.

The net absorption of funds was in response to an increase in liquidity in the banking system during the week under review. Credit institutions started the current week with a surplus in the statutory reserve deposit accounts with the bank. In addition, direct credits (mainly related to pensions and interest payments) amounting to Lm7.4 million boosted liquidity further. Partly offsetting these factors was the purchase of Lm3.9 million worth of foreign currency against the Maltese lira from the bank.

Interbank market

As in the previous weeks, no interbank deals were transacted during the week under review.

Treasury bill market

In the primary market for Treasury bills, the Treasury invited tenders for 91-day bills maturing on 4 May 2007. Out of the Lm29.5 million worth of bids submitted, only Lm8.7 million were accepted by the Treasury, once again reflecting the government’s strong liquidity position. As Lm12 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by Lm3.2 million to Lm144.8 million.

The latest three-month rate resulting from the week’s Treasury bill auction was 4.0360%.

This was 18.6 basis points higher than the rate on the 91-day bills issued on 19 January 2007 and reflected a bid price of Lm99.0038 per Lm100 nominal.

This was the first auction for 91-day bills since the 25 basis point increase in the Central Intervention Rate on 25 January 2007.

On Tuesday, the Treasury invited tenders for 273-day bills maturing on 9 November 2007. In the coming week, the Treasury will invite bids for 91-days bills maturing 18 May and 182-days bills maturing on 17 August 2007.

In the secondary market for Treasury bills, trading fell sharply from the previous week’s level of Lm3.8 million to insignificant amounts. All deals were transacted with the bank in its role of market-maker.

Malta real-time interbank payment system (MaRIS) – January 2007

During the month of January, 4,483 payment messages were processed through MaRIS, for a total value of Lm1,525.8 million.

Of these, 2,176 were payments on behalf of customers, for a value of Lm64.8 million and 2,307 were interbank payments totalling Lm1,461 million.

The daily average volume for the month under review was 213 messages for a value of Lm72.7 million.

The highest number of messages was processed on 29 January, with 278 messages, while the highest value was registered on 5 January with Lm281.7 million.

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

centralbankmalta.com