Instruction No. 4 (to banks) - Modification No. 11: Money Market Operations

BANQUE CENTRALE DU CONGO LE GOUVERNEUR Instruction n°4 (aux banques) Modification n°11, mise en vigueur le Concerne: Opérations du marché monétaire

CHAPITRE 1 : BANQUE CENTRALE DU CONGO TITRE 1 : Dispositions générales

Article 1 In virtue of the provisions of Article 8 of its statutes, the Central Bank of Congo makes available to banks two refinancing windows, namely the "short-term lending" window and the "permanent facilities" window.

Article 2 The refinancing of banks by the Central Bank is subject to the pledge of high-quality public or private bills and securities.

SECTION 1: Pledge of public bills and securities

Article 3 By public bills and securities, we mean bills and securities of different maturities issued by the Treasury as well as the Central Bank. These are: • Treasury debt securities; • Central Bank debt securities (Treasury Bills).

Article 4 The pledge of public bills and securities is carried out at the Directorate of Banking Operations and Markets prior to any refinancing request.

Article 5 Paragraph 1 The pledge value of public bills and securities issued by the State corresponds to their nominal amount reduced by a haircut.

Paragraph 2 The pledge value of public bills and securities issued by the Central Bank corresponds to their nominal amount. To be eligible for pledge, Central Bank debt securities must have an initial maturity of at least 7 days and a number of days remaining greater than or equal to the duration of the loan requested.

SECTION 2: Pledge of private bills and securities

Article 6 Paragraph 1 The Central Bank of Congo, Directorate of Banking Operations and Markets, only accepts private bills and securities for pledge to the extent that it has been put in possession, by the authorized bank, of the file constituted at the time of the opening of the discount credit in accordance with Instruction No. 6. These bills and securities may be: • Bills of exchange; • Promissory notes; • Other private bills and securities benefiting from State guarantee.

Paragraph 2 To be eligible for pledge, private bills must: • be drawn up on standardized forms; • be caused; • be created within thirty days of the date of invoice or contract; • be domiciled in an authorized bank or financial institution; • have at least thirty days remaining; • have as mandatory maturity dates the 5th, 10th, 20th and 30th of the month and the last days of the month; • bear at least three notably valid signatures, of which at least one must be that of an authorized bank or authorized financial institution.

These signatures must be preceded by the name and capacity of the signatories.

Article 7 The pledge value of private bills and securities is fixed in accordance with the provisions of Instruction No. 6 regarding bills eligible for refinancing operations at the Central Bank of Congo.

Article 8 After verification, the value of private bills and securities admitted to pledge is recorded in the account of the requesting bank in the books of the Central Bank.

SECTION 3: Return of pledged bills and securities

Article 9 Paragraph 1 At the request of an authorized bank, the Central Bank of Congo returns any pledge pledged in excess of the outstanding refinancing balance.

Paragraph 2 In the event of amortization of pledged bills and securities, the authorized bank is required to replace, before maturity, the pledged bills and securities with other bills and securities of the same nature and same nominal value.

TITRE II : SHORT-TERM LENDING WINDOW

Article 10 Short-term lending operations consist of temporary transfers of Congolese Francs by the Central Bank of Congo to authorized banks at a maturity of 7 days maximum, renewable at the discretion of the Central Bank.

Article 11 Paragraph 1 The refinancing agreement at the short-term lending window of the Central Bank of Congo is materialized by a document called "AVAL" on which are specified the refinancing window, the amount of the operation, the interest rate, the value date, the maturity, and the nature of the guarantee.

[Note: Articles 12-16 are not present in the source text]

Article 17 The money is lent on a day-to-day basis. The maturity is carried beyond 24 hours taking into account non-working days.

Article 18 Operations at the permanent facilities window are carried out at the key rate increased by a margin.

Article 19 Paragraph 1 The refinancing agreement at the Permanent Facilities Window of the Central Bank of Congo is materialized by a document called "AVAL" on which are specified the refinancing window, the amount of the operation, the interest rate, the value date, the maturity, and the nature of the guarantee.

Paragraph 2 Upon presentation of the Aval duly bearing the two authorized signatures of the Directorate of Banking Operations and Markets, including that of a Department Head, the loan amount is credited to the account of the authorized bank.

Paragraph 3 The granting of the permanent facility requested via telecompensation is validated after presentation of an aval duly bearing two authorized signatures of the Directorate of Banking Operations and Markets, including that of a Department Head, conforming to the one digitized by the requesting bank.

Article 20 Interest relating to permanent facility operations is collected at maturity.

Article 21 Any facility granted beyond the constituted guarantees will be taxed at the permanent facilities rate increased by half.

Article 22 Any recourse by banks to the permanent facility window on the last working day of the month is prohibited.

Article 23 Paragraph 1 To cover a bank's debit position in the Clearing House on a day other than the last days of the month, the Issuing Institute grants ex-post a permanent facility at the permanent facilities rate increased by 100% and a Debit Notice for repayment of Principal and payment of interest, accompanied by a regularization aval, must be presented to the Clearing House the following day.

Paragraph 2 To cover a bank's debit position in the Clearing House not covered on the last day passed of the month, the Central Bank of Congo grants ex-post a permanent facility at the permanent facilities rate increased by 200% and a Debit Notice for repayment of Principal and payment of interest, accompanied by a regularization aval, must be presented to the Clearing House the following day.