Regulatory Alerts2015-01-01
Changes to the Overnight Lending Facility Window
The Bank of Zambia restricts commercial banks' access to the Overnight Lending Facility window to once per week, effective immediately. The central bank also discontinues the automatic route for accessing overnight funds through lapsing intraday loans, treating unpaid cash as a default that triggers automatic forfeiture of the covering securities and haircut. These measures support the current monetary policy stance to contain inflationary pressures while allowing ongoing monitoring and periodic review of access conditions.
[Logo] Bank Of Zambia OFFICE OF THE DEPUTY GOVERNOR - OPERATIONS
BOZ/EXE/DGO/fmkts/bp
November 18, 2015
CB Circular No. : 22/2015
To : All Heads of Commercial Banks
CHANGES TO THE OVERNIGHT LENDING FACILITY WINDOW
In view of the unprecedented developments in the domestic foreign exchange and money markets, the Bank of Zambia wishes to advise all commercial banks that, with immediate effect, access to the Overnight Lending Facility (OLF) window will only be allowed once in a week. In addition, the automatic route by commercial banks for accessing overnight funds through lapsing intraday loans has henceforth been discontinued.
Where a commercial bank fails to repay the cash obtained under the intraday repo facility, it will be treated as a default, and the securities covering the value of the loan, including the haircut, will automatically be forfeited to Bank of Zambia.
Above measures are in line with the current Bank of Zambia monetary policy stance aimed at containing inflationary pressures.
The Bank of Zambia will continue to monitor developments in the money market and review the conditions for accessing the OLF from time to time.
[Signature]
Bwalya K. E. Ng’andu (Dr) DEPUTY GOVERNOR – OPERATIONS
Cc Governor
Bank Square, Cairo Road P .O. Box 30080, Lusaka, Zambia Tel: 260-211-226844, 228888 Fax:260-211-237070 E-mail:dgo@boz.zm.Web: http://www.boz.zm