Bhutan: Technical Assistance Report-Royal Monetary Authority-Steps Towards a Liquidity Forecasting and Management Framework

April 30, 2019

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Format: Chicago

Bhutan: Technical Assistance Report-Royal Monetary Authority-Steps Towards a Liquidity Forecasting and Management Framework, (USA: International Monetary Fund, 2019) accessed December 26, 2024

Summary

This Technical Assistance report highlights that setting up a liquidity forecasting framework would go a long way in establishing a key building block allowing the Royal Monetary Authority of Bhutan (RMA) to fulfil its legal mandate to formulate and implement monetary policy in ways better aligned with current central bank practices. The structural liquidity surplus, mainly due to foreign reserves accumulation, has been broadly stable in the absence of RMA intervention. The paper discusses that the volatility of autonomous factors and the fragmentation of the money market justify ambitious steps by the RMA towards setting up a liquidity management framework. The mission identified several constraints and gaps that need to be addressed to support the effectiveness of a liquidity forecasting framework. The mission’s recommendations presented in the report aim at streamlining the processing of the Government’s financial transactions and cash balances. Looking ahead, monetary policy transmission would benefit from developing RMA’s liquidity forecasting and management capacity.

Subject: Asset and liability management, Banking, Financial markets, Fiscal accounting and reporting, Liquidity, Liquidity forecasting, Liquidity management, Money markets, Public financial management (PFM)

Keywords: Aggregate liquidity condition, Aggregate liquidity situation, Autonomous factor, Commercial bank, CR, Excess reserves, Fiscal accounting and reporting, Interbank market, ISCR, Liquidity, Liquidity condition, Liquidity forecasting, Liquidity management, Liquidity management, Liquidity-providing facility, Money markets, RMA authorities, RMA function, RMA liquidity-providing facility, RMA staff, RMA's liquidity forecasting

Publication Details

Pages:

45
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2019/114
Stock No:

1BTNEA2019001
ISBN:

9781498312417
ISSN:

1934-7685

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