BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 1/2013:
On the use of sterilisation bonds in emerging Asia
Aaron Mehrotra ()
Abstract: We document recent developments in the use of
sterilisation bonds by six central banks in emerging Asia, and discuss the
implications for monetary policy and the financial sector. An important
development in the sterilisation of foreign exchange interventions in past
years has been the frequent use of central banks’ own paper. There has been
an attempt to lengthen the maturity structure of sterilisation bills, and
maturities have risen, especially in 2010–11. The choice of sterilisation
instrument is likely to depend partly on their relative costs. In
particular, as the yield on central bank securities has fallen relative to
the rate of remuneration of required reserves, some central banks in Asia
have increasingly used central bank securities for sterilisation.
Keywords: sterilisation bond; central bank bonds and bills; foreign exchange reserves; emerging Asia; (follow links to similar papers)
JEL-Codes: E43; E50; E52; E58; (follow links to similar papers)
33 pages, January 15, 2013
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