MNI TEXT: BOC Boosts Term Repos, Takes 3 Other Liquidity Steps

By Greg Quinn

     OTTAWA (MNI) - Following is a statement from the Bank of Canada published

Friday:

     The Bank of Canada (Bank) continues to take actions to support the

efficient and continuous functioning of Canadian financial markets by ensuring

that the Canadian financial system has sufficient liquidity and that financial

institutions can continue to extend credit to both households and businesses. To

that end, the Bank is announcing four measures today designed to support market

functioning given the rapidly evolving uncertainty around the impact of

COVID-19.

     First, the Bank is increasing the frequency of its Term Repo operations to

at least twice a week starting Tuesday March 24, 2020. Operational details will

be communicated along with future upcoming operations on the Bank's website. 

The previously revised Term Repo terms and conditions remain in effect. The

details of the upcoming operations for the week of March 23, 2020 are as

follows:

     Auction  Amount     Date          Settlement Date  Term (Days) Maturity

Date

Regular  $4 billion 24 March 2020 26 March 2020    175         17 September 2020

Regular  $8 billion 24 March 2020 26 March 2020    357         18 March 2021

Regular  $8 billion 26 March 2020 30 March 2020    360         25 March 2021

NHA MBS  $4 billion 26 March 2020 30 March 2020    87          25 June 2020

     Second, the Bank is announcing its intention to activate the Contingent

Term Repo Facility (CTRF) by April 3rd to counter any severe market-wide

liquidity stresses and further support the stability of the Canadian financial

system.  Upon activation, the CTRF would offer Canadian dollar term funding to

eligible counterparties on a standing, bilateral basis. This facility would

provide funding liquidity to a broad range of financial institutions that can

demonstrate significant activity in the Canadian money and/or bond markets, are

subject to federal or provincial regulation, and meet any other conditions the

Bank may require.  Terms and Conditions would be published upon activation.

     Stakeholders interested in signing legal documents or discussing their

eligibility to the CTRF are asked to reach out to the Bank.

     Third, following the previously announced Coordinated Central Bank Action

to Enhance the Provision of Global US Dollar Liquidity the Bank is announcing

that it intends to launch a USD Term Repo Facility, should the need arise.

Funding would be provided against a broad range of Canadian dollar collateral

eligible for the Standing Liquidity Facility. Upon activation, the US dollar

Term Repo Facility would provide US dollar liquidity to Canadian Primary Dealers

and operations would be done on a fixed-rate full-allotment basis and at

overnight index swaps + 25 bps. Terms and Conditions will be published at the

time of activation.

     Finally, reflecting the scale of liquidity operations the Bank is

undertaking and the associated increases in settlement balances, the operating

band will be narrowed to 25 basis points compared to 50 basis points previously.

Effective Monday, March 23rd, the deposit rate will be set to the current target

for the overnight rate.

     The Bank of Canada continues to closely monitor global and domestic market

developments and remains committed to providing all the liquidity the financial

system needs so that it can continue to serve Canadians.

     See:

https://www.bankofcanada.ca/2020/03/bank-of-canada-announces-additional-measures

-to-support-market-functioning/

--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com

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