While the Bank of Jamaica (BOJ) assured the public recently that current holdings of the Jamaica dollar liquid balances by the banking system are adequate for immediate needs, it is further advising financial institutions that it will facilitate expanded access to both foreign currency and Jamaica dollar liquidity through various channels, throughout the coronavirus (COVID-19) pandemic.

These include:

• removing the current limits on the amounts that deposit-taking institutions (DTIs) borrow overnight without being charged a penal rate.

Overnight liquidity support will be made available at the prevailing rate of 2.5 per cent, limited only by collateral;

• the re-introduction of a facility whereby the central bank can make Jamaica dollar liquidity available to DTIs for periods up to six months.

These lending arrangements can be backed by GOJ and BOJ securities.

“With the sharp contraction in the tourism industry and the likely disruption to remittance inflows, the supply of foreign exchange to the market will fall in the near term. The central bank will support the foreign exchange needs of businesses in the real sector through sales to authorised dealers and cambios, as needed,” the central bank stated.

“Bank of Jamaica also stands ready to expand the volume of swap arrangements with authorised dealers. At the same time, the bank has asked securities dealers and arrangers to postpone the issue of instruments denominated in foreign currency until the flows in the market can accommodate these capital market transactions,” the statement continued.

 It further added that to enable access to liquidity by all financial institutions, it is also prepared to purchase Government of Jamaica securities on the secondary market from holders of these instruments, to intermediate funds between holders of liquid balances and others who require liquidity and will activate the Emergency Liquidity Facility, established in 2015, upon application by any financial institution.