Temporary Open Market Operations

In the Name of Allah, the Most Gracious, the Most Merciful

[Logo of the Central Bank of Jordan]

Number: 4 / 12817
Date: 20 Muharram 1434 AH
Corresponding to: December 4, 2012 AD

Memorandum to Licensed Banks
Number (67 / 2012)
Subject: "Temporary Open Market Operations"

Following our memorandum to licensed banks number (29/2012) dated May 29, 2012, and with the Central Bank's commitment to continuously developing and activating monetary policy tools aimed at providing signals regarding monetary policy by influencing the volume of excess reserves in Jordanian Dinars, and to add more flexibility to banks in managing their monetary liquidity, thereby supporting the performance of the money and financial markets in the Kingdom, the Central Bank will continue to inject the necessary liquidity for banks in Dinars using repurchase agreements and foreign currency swap agreements (Currency Swap). The following are the general conditions and procedures governing the use of these tools:

A. Repurchase Agreements.

1- These agreements are concluded for the following tenors:

• One month
• Three months
• Six months
• Nine months
• One year

2- These agreements are executed according to the Delivery versus Payment (DVP) principle, and government securities and government-guaranteed instruments are considered acceptable instruments for the purpose of executing repurchase agreements.

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CENTRAL BANK OF JORDAN
البنك المركزي الأردني

3- Repurchase operations executed within this framework are subject to the Master Repurchase Agreement signed between the Central Bank of Jordan and licensed banks.

4- Interest on a repurchase agreement is calculated based on the actual number of days, and the year is considered (365) days for this purpose.

5- Repurchase agreements under this tool are executed via a fixed-rate (quantitative) interest rate auction.

6- Overnight and one-week repurchase agreements remain in effect according to the conditions related to each.

B. US Dollar and Foreign Currency Swap Agreements.

1- The Central Bank may swap amounts in US Dollars placed at its disposal by banks with amounts in Jordanian Dinars placed at the banks' disposal, according to the exchange rates issued by the Central Bank for this purpose, within the following tenors:

• One month
• Three months
• Six months
• Nine months
• One year

2- The minimum amount for a swap contract in US Dollars is ten million US Dollars and its multiples.

3- The outstanding balance of existing swap contracts for any bank with the Central Bank resulting from swap operations at any time must not exceed twice the capital and reserves of that bank.

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CENTRAL BANK OF JORDAN
البنك المركزي الأردني

4- The outstanding balance of swap contracts for any bank with the Central Bank may be increased to three times the bank's capital and reserves, provided that prior approval is obtained for this.

5- The Central Bank issues a daily bulletin regarding US Dollar swap rates against the Dinar for the tenors specified in Article (B/1), where swap operations are based on these rates on the same day.

6- The contract is concluded with the Bank via Reuters terminal or by fax before 2:30 PM, and the transaction is reinforced with a written request no later than the next working day.

7- Any delay in crediting the US Dollar amount to the Central Bank's account or the licensed bank's account with any of their foreign correspondents will incur interest for the duration of the delay at the US Dollar account statement interest rate of that correspondent during that period.

8- In the event of a delay in crediting the Jordanian Dinar amount equivalent to the US Dollar value to the licensed bank's account, the Central Bank will bear interest for the duration of the delay equal to the prevailing overnight "Dinar Deposit" interest rate at that time.

Any previous instructions issued by the Central Bank regarding US Dollar and foreign currency swap operations against the Jordanian Dinar are hereby repealed.

Governor
Dr. Ziad Fries