Fiji Sun, 03 June 2017 – The Reserve Bank of Fiji’s Chief Manager Risk Management and Communications, Lorraine Seeto, yesterday responded to queries sent by the Fiji Sun Business on liquidity.
Below are her responses to the questions.
What was the main driver of the increase in bank liquidity?
While there are various measures of bank liquidity, the most common measure is excess reserves or commercial banks’ demand deposits (BDD) placed with the central bank. These are essentially deposits with commercial banks that are over and above the required statutory reserve deposit (SRD) levels required by the Reserve Bank of Fiji (RBF).
There are various factors that influence the level of BDD including changes in the level of foreign reserves, the amount of currency in circulation (CIC) or cash-in-hand held by the general public, the inflow and outflow of Government deposits with RBF, changes in SRD and the injection or withdrawal of funds by RBF under its various lending facilities or through the conduct of open market operations (OMO). Read more…
