Following the adoption of the euro by Malta on 1 January, the Central Bank of Malta (CBM) started to form part of the Eurosystem’s monetary policy operational framework. On Wednesday, 2 January, the European Central Bank (ECB) announced the first Main Refinancing Operation (MRO) of the year. These operations consist of a seven-day liquidity injection, and are conducted on a weekly basis according to a pre-defined calendar (see www.ecb.int). None of the eligible local banks opted to participate in Wednesday’s auction because liquidity levels in the local banking sector are still relatively high.
In addition to the weekly MRO operation, the ECB from time to time also conducts fine-tuning operations through which the Eurosystem injects or absorbs funds, normally on an overnight basis, in order to stabilise money market conditions and to steer money market rates as closely as possible to the ECB’s Main Refinancing Operation Minimum Bid Rate. During the week the ECB announced two such fine-tuning operations to absorb up to e200 billion per operation at a fixed rate of four per cent. One of the domestic credit institutions participated in the second such operation, submitting bids for a total of e30 million. As the percentage allotment accepted by the ECB was 94.1 per cent, the local institution was allotted e28.2 million.
MROs are announced every Monday of the week, while Long Term Re-financing operations (LTROs), having a maturity of three months, are announced every last Tuesday of the month. Each auction closes on the day following the announcement, with successful applicants settling on the third day. Fine Tuning operations, as explained above, are not regularly announced but often occur towards the end of the maintenance period, with the announcement, allotment and settlement occurring on the same day. Each monetary operation is conducted with the CBM acting on behalf of the Eurosystem in Malta. Participating counterparties are informed of the result of each operation by the CBM, following the allotment announcement made by the ECB.
Treasury Bill Market
In the primary market for Treasury bills, the Treasury invited tenders for 91-day bills maturing on 4 April 2008. Offers amounted to e69.2 million but none of the bids submitted were accepted by the Treasury. As e18.8 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by the same amount to e336.2 million
On Tuesday the Treasury invited tenders for 182-day and 273-day bills maturing, respectively, on 11 July and 10 October 2008.
Treasury bill trading on the Malta Stock Exchange amounted to e1.47 million during the week, with all trades being conducted by the Bank in its role as market maker. No transactions were conducted off-Exchange.
Malta Real-time Interbank
Payment System (MaRIS) – December 2007
During the month of December 4,316 payment messages were processed through MaRIS, for a total value of Lm2,108.5 million. Of these 2,034 were payments on behalf of customers, for a value of Lm83 million, and 2,282 were interbank payments totalling Lm2,025.5 million. The daily average volume for the month was 227 messages for a value of Lm110.97 million. The highest number of messages was processed on 17 December with 300 messages, while the highest value was registered on 21 December with Lm416.01 million.
MaRIS ceased operations on 31 December 2007. It has been replaced by TARGET2 within which the CBM, and Malta Stock Exchange are direct participants.
Further details can be found on the Central Bank of Malta website: www.centralbankmalta.org.