Normalisation of liquidity management after the Covid crisis
To ensure the transmission of the policy rate and foster well-functioning markets after the Covid outbreak, Norges Bank has implemented a number of measures beginning in March 2020. The last of the extraordinary F-loans extended under these measures matures today.
NOK 2.31 billion, which was lent on 26 August 2020, will be repaid today to Norges Bank. During 2020, banks borrowed nearly NOK 200 billion in the form of F-loans from Norges Bank. The crisis measures had an impact on banks’ deposits at Norges Bank and the liquidity management system.
In managing banking system liquidity, Norges Bank aims to maintain the level of liquidity, banks’ unrestricted bank deposits at the central bank, at around NOK 35 billion, using F-loans and F-deposits. During the period of extraordinary F-loans outstanding, Norges Bank withdrew surplus liquidity using overnight F-deposits so that banks could draw on the liquidity from the extraordinary F-loans on a daily basis.
Beginning today, Norges Bank will return to ordinary liquidity management and use of the F-deposit facility. This means that from now on, surplus liquidity will be withdrawn using F-deposits with maturity determined by the projections of structural liquidity.
With today’s repayment, Norges Bank’s liquidity management system will return to normal when the temporary changes in the guidelines for pledging collateral for loans from Norges Bank are reversed on 31 August 2021.
More on Norges Bank’s liquidity management system.
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