Instruction No. 001-DOM/19 amending and supplementing certain provisions of Instruction No. 005-DOM/17 of 19 December 2017 on the implementation of monetary policy instruments of Banky Foiben'i Madagasikara

BANKY FOIBEN'I MADAGASIKARA

DIRECTION DES OPERATIONS MONETAIRES

Instruction No. 001-DOM/19 amending and supplementing certain provisions of Instruction No. 005-DOM/17 of 19 December 2017 on the implementation of monetary policy instruments of Banky Foiben'i Madagasikara

The Governor of Banky Foiben'i Madagasikara,

Having regard to Law No. 2016-004 of 29 July 2016, supplemented by Law No. 2016-057 of 2 February 2017 establishing 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. 005-DOM/17 of 19 December 2017 on the implementation of monetary policy instruments of Banky Foiben'i Madagasikara,

DECIDES

Article 1: The purpose of this Instruction is to amend and supplement the provisions of Articles 2, 3, 9, 11, and 14 of Instruction No. 005-DOM/17 of 19 December 2017 on the implementation of monetary policy instruments of Banky Foiben'i Madagasikara.

Article 2: The definition of standing facilities stipulated in Article 2 "Definitions" is amended as follows:

« Article 2: Definitions (...) - Standing facilities: operations aimed at meeting both temporary refinancing needs and temporary liquidity placements by eligible participants (...) »

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Article 3: Paragraphs 3.1 and 3.2 of Article 3 "Framework for the implementation of monetary policy" are amended as follows:

« Article 3: Framework for the implementation of monetary policy (...) 3.1. Liquidity injection and withdrawal operations initiated by BFM, which include: - Main refinancing operations; - Fine-tuning operations; - Longer-term refinancing operations; - Securities sales; - Fixed-rate operations with total or partial allocation of submissions, the description of which, as well as the related procedures, are set out in Annex VIII of this Instruction.

3.2. Standing facilities initiated by eligible participants, consisting of: - The marginal lending facility, - The deposit facility. (...) »

Article 4: The provisions of Article 9 are amended as follows:

« Article 9: Marginal lending facility and deposit facility 9.1. Marginal lending facility 9.1.1 The marginal lending facility with repurchase agreement consists of BFM making liquidity available to eligible participants. Eligible participants may use repurchase agreements with same-day value. The duration of the marginal lending facility is one (1) day, renewable at the discretion of eligible participants. 9.1.2 The rate for the marginal lending facility is set by BFM instruction. 9.1.3 Eligible participants interested in this operation must submit their application to BFM by any written traceable method using the model in Annex V before the daily closing of the money market. 9.1.4 BFM notifies its decision by any written traceable method on the same day and proceeds with accounting entries. 9.1.5 At maturity, the amounts increased by interest are debited to the beneficiary's account, and the securities placed in repurchase are returned to the provider.

9.2. Deposit facility (new) 9.2.1 The deposit facility allows eligible participants to place liquidity with BFM. Eligible participants may make deposits with same-day value. The duration of the deposit facility is one (1) day, renewable at the discretion of eligible participants.

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9.2.2 The rate for the deposit facility is set by BFM instruction. 9.2.3 Eligible participants interested in this operation must submit their application to BFM by any written traceable method using the model in Annex VII before the daily closing of the money market. 9.2.4 BFM notifies its decision by any written traceable method on the same day and proceeds with accounting entries. 9.2.5 At maturity, the amounts increased by interest are credited to the beneficiary's account. »

Article 5: The provisions of Article 11 are amended as follows:

« Article 11: BFM's key interest rates BFM sets and publishes two key interest rates: the rate for one-year operations and the rate for one-day maturity operations. The key rate corresponding to one-year operations is the ceiling rate for liquidity withdrawal operations with a maturity of one year or less on the money market, while the one-day operation rate is the floor rate for refinancing. Consequently, the rates for operations with maturities between 1 and 360 days are determined by the market. »

Article 6: The provisions of Article 14 are amended as follows:

« Article 14: Provisions common to the rate of standing facilities, the mandatory reserve coefficient, and key interest rates. 14.1 The rate of standing facilities, the mandatory reserve coefficient, and key interest rates are set by BFM instruction. 14.2 Periodic reviews of the standing facilities rate, the mandatory reserve coefficient, and key interest rates will take place when the economic context requires it. »

Article 7: Final Provisions The Annex forms an integral part of this Instruction. This Instruction enters into force as of 03 MAY 2019. All provisions contrary to this Instruction are hereby repealed.

Antananarivo, 03 MAY 2019

THE GOVERNOR ALAIN H. RASOLOFONDRAIBE

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Annex VII (new):

ANNEX VII

APPLICATION FOR ACCESS TO THE DEPOSIT FACILITY

Bank Name: Placement date _________________ DEPOSIT WITH BFM

Amount (in Ar)	Duration (in days)	Date of	Rate (%)
In figures	In words	Placement	Maturity

At ____________________, on ____________________ (Signatures and bank seal)

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Annex VIII (new):

ANNEX VIII

PROCEDURE APPLICABLE TO FIXED-RATE OPERATIONS WITH TOTAL OR PARTIAL ALLOCATION OF SUBMISSIONS

Fixed-rate operations with total or partial allocation of submissions include:

• liquidity injection operations;
• liquidity withdrawal operations.

The procedures applicable to fixed-rate operations with total or partial allocation of submissions are identical, depending on their maturity, to those for:

• fine-tuning operations,
• main refinancing operations,
• and longer-term refinancing operations.

However, without prejudice to procedures common to other operations, fixed-rate operations with total or partial allocation of submissions are subject to the following specific procedures:

• a single auction rate is set by BFM and disseminated at the time of the announcement,
• no amount will be announced, as eligible participants on the money market may submit any amount at their discretion,
• the total amount retained by BFM depends on the estimated needs or excesses of central bank money for the period covered in the announcement.

Eligible participants must indicate in their submission, in accordance with the model in Annex IX, the amount of their bid relative to the single rate announced by BFM.

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Annex IX (new):

ANNEX IX

SUBMISSIONS FOR FIXED-RATE OPERATIONS WITH TOTAL OR PARTIAL ALLOCATION OF SUBMISSIONS - INJECTION (1) - WITHDRAWAL (1)

Bank Name: Rate: Launch date _________________

SUBMISSION
Total Amount (in Ar)
In figures

COLLATERAL(2): Total collateral amount(3) (4): Ariary....................... Interest amount: Ariary .......................

COLLATERAL
ORDER NO.
TOTAL...

(1) Strike out the irrelevant mention (2) To be completed only in case of Injection Operations (3) Requested amount plus interest (4) Multiple of 100 million Ariary.

At ____________________, on ____________________ (Authorized signatures and bank seal)