Banco de la República (The Central Bank of Colombia) injects permanent liquidity to the economy by purchasing public and private debt instruments
In its extraordinary session on 23 March 2020, the Board of Directors of the Central Bank decided to inject permanent liquidity to the economy in order to ensure the proper operation of financial markets.
To do so, the Board decided the following:
- To authorize the Central Bank to purchase private instruments issued by credit institutions with remaining maturities of less than or equal to three years. The purchases will be performed through variable price auctions. The first auction will take place on 24 March for an approximate amount of COP $2 trillion (t). The total amount of the purchases of these instruments would be approximately $10 t. The counterparties authorized to participate in the auction will be credit institutions, insurance companies, trust companies, brokerage firms, investment management companies, on their proprietary position or on behalf of managed funds.
- To authorize the Central Bank to purchase TES up to $2 trillion (t) in what remains of March. These purchases will be performed through the Electronic Trading System (SEN) of Banco de la República.
- The Central Bank will continue to auction repos with private debt instruments for $500 billion on those days when there are no purchase auctions of these instruments. The auction of repos previously convened is canceled. The next auction will be convened for 1 April 2020 to 30 and 7 days.
- The Central Bank will continue with daily auctions of repos with public instruments in ample amounts.
This ensures the provision of permanent liquid resources to the economy.