MNI BRIEF: BOC Consults On 1-Month Bill Sales As BAX Fades

Canada is asking investors about potentially offering regular sales of one-month treasury bills to fill a gap as the Banker's Acceptance market lapses, which could add strain to already volatile debt markets.

The Bank of Canada's annual debt market consultation published Thursday said the BA market is expected to disappear as the benchmark CDOR interest rate is replaced with CORRA and asks if money-market investors would benefit from a one-month T-bill. Noting recent tightness in two-year bond trading, investors were also asked if the current CAD16 billion benchmark for that maturity should be increased.

The BOC also asked for feedback on the switch to quantitative tightening. Some researchers have said the surge in the money supply was one reason inflation has climbed in Canada. (See: MNI INTERVIEW: BOC Needs Faster Hikes, Risks Slump-Ex Adviser)