The Bank of Ghana [BoG] in the auction of its own bills – BoG bills – has raised GHS 817m in fresh debt.
The BoG bills with a maturity period of 14 days was auctioned by the Central Bank on Wednesday, June 15, 2022.
The bills, per the auction results from the BoG was auctioned at an interest rate of 19 percent.
The auction results however, does not indicate the value of bids made by banks, insurance firms and pension funds for the bills.
It does not also indicate whether the BoG was able to meet its target with the auction as both amounts were not stated by the BoG.
Central Bank bills – in this case BoG bills – mostly employed through Open Market Operations (OMO), serves as a monetary policy tool used by Central Banks to regulate money supply.
The main function of Central Bank bills is to manage the liquidity of the banking system through selling short-term securities on the primary market.
In most cases, funds raised from the auction of the BoG bills are directly loaned to government to support its short term needs.
The interest rate on the Central Bank bills is the key interest rate that determines the monetary policy stance or rate.
Source: norvanreports