Regulatory Alerts2019-10-25
Instruction No. 007-DOM/19 on the Interest Rate Corridor System
The Central Bank of Madagascar issued Instruction No. 007-DOM/19 to formally establish an interest rate corridor system for monetary operations. The directive sets the corridor width at 4.4 percentage points, bounded by a 0.9% deposit facility rate and a 5.3% marginal lending facility rate. Consequently, the central bank is exempt from publishing a separate policy rate, instead using the marginal lending rate for non-tender borrowings and the deposit rate for non-tender placements.
CENTRAL BANK OF MADAGASCAR
DIRECTORATE OF MONETARY OPERATIONS
INSTRUCTION NO. 007-DOM/19 on the Interest Rate Corridor System
The Governor of the Central Bank of Madagascar,
Having regard to Law No. 2016-004 of 29 July 2016, supplemented by Law No. 2016-057 of 2 February 2017 on the Statutes of the Central Bank of Madagascar,
Having regard to Decree No. 2014-1684 of 29 October 2014 appointing the Governor of the Central Bank of Madagascar,
Having regard to Instruction No. 006-DOM/19 of 25 October 2019 on money market instruments,
HEREBY DECIDES:
Article 1: An interest rate corridor for monetary operations is bounded by the rates of the standing facilities defined in Article 2 of Instruction No. 006-DOM/19 of 25 October 2019 on money market instruments, namely the deposit facility rate and the marginal lending facility rate.
Article 2: The width of the interest rate corridor is set at 4.4 percentage points.
Article 3: Depending on the monetary policy operational framework and the interest rate corridor choice adopted by the BFM, the latter is not required to publish a policy rate as provided for in Law No. 2016-004 of 29 July 2016, supplemented by Law No. 2016-057 of 2 February 2017 on the Statutes of the Central Bank of Madagascar.
Article 4: If the policy rate is not published by the BFM,
- the reference rate for non-tender borrowings from the BFM shall be the marginal lending facility rate,
- the reference rate for non-tender placements with the BFM shall be the deposit facility rate.
Article 5: The rates of the standing facilities are set as follows
- Deposit facility rate: 0.9%
- Marginal lending facility rate: 5.3%
Article 6: This Instruction shall enter into force on 1 November 2019.
Antananarivo, 25 OCT 2019
[Signature] THE GOVERNOR ALAIN H. RASOLOFONDRAIBE
P.O. Box 550 Antananarivo (101) – Madagascar ■ Tel. (261) 20 22 217 51 / 20 22 234 65 ■ Fax (261) 20 22 345 32 E-mail: banque-centrale@bfm.mg ■ Website: www.banque-centrale.mg