THE African Export-Import Bank (Afreximbank)’s guaranteed $100 million interbank market is set to be operational by next month, a move that would help in distributing liquidity.
In his maiden monetary policy statement yesterday, Reserve Bank of Zimbabwe (RBZ) governor John Mangudya said the interbank facility had been delayed due to the need to make the instrument tradeable in the secondary market.
“The African Export-Import Bank-guaranteed interbank market facility [or Aftrades facility] of $100 million is earmarked to be operational between end of August and mid-September 2014.
“This facility would go a long way to augment the current bilateral like-minded intermarket trades taking place in the financial sector,” Mangudya said.
He said the Aftrades facility was sector-wide and would complement the lender of last resort function of RBZ.
“The delay in the launch of this facility was attributable to the need to make the instruments under Aftrades tradable in the secondary market. This has been completed,” he said.
In March, Afreximbank came up with a $100 million facility designed as a collateral swap whereby it will lend its securities to local banks in exchange for eligible collateral. The banking sector has been operating without an active interbank market under the multi-currency regime introduced in 2009 due to the absence of acceptable collateral.
This resulted in the market being segmented with some banks having huge surpluses while other banks had liquidity challenges.
Under normal circumstances, liquidity would have moved from the surplus institutions to those experiencing shortages through the interbank market.
Banks with excess liquidity were averse to lending to those experiencing shortages due to credit risk issues associated with those institutions.