Cyprus: Technical Assistance Report-Debt and Cash Management

Volume/Issue: Volume 2022 Issue 002

Publication date: January 2022

ISBN: 9781616358419

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Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Banks and Banking , Money and Monetary Policy , Public Finance , International - Economics , cash management practice , funding plan , cash liquidity buffer , investment option , debt Management Office , Government cash forecasting , Government debt management , Liquidity requirements , Currencies , Debt management , Global , Europe

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Summary

In tandem with Eurozone financial market developments and the prevalence of negative interest rates in 2020, Cypriot banks passed through the costs of their liquidity to their customers, reducing the attractiveness of placing PDMO cash surpluses in domestic bank deposits. Suitable investment alternatives to central bank deposits for the PDMO’s liquidity buffer are scarce, given negative yields on other Eurozone sovereign and agency issues. This situation is shared by the PDMO with almost all of its Eurozone peers. While this is likely to persist in the short term, it should not preclude establishing a framework governing the PDMO’s investment policy or a suitable set of guidelines.