Promoting exchanges between banks

According to the Central Bank of Madagascar (BFM), interbank loans are becoming increasingly intensive. In the first quarter of 2024, the volume of transactions between banks increased by 80 %. This information is reported in the latest bulletin recently released by the BFM.

The BFM attributes this growth primarily to the upward revision of the required reserve ratio (RRR), which has supported these liquidity exchanges between banks. Banks are required to maintain a certain amount of non-remunerated deposits with the monetary authority following the RRR. This system is implemented by the BFM to limit the quantity of bank liquidity that could lead to excessive money creation.

The BFM also encouraged exchanges between banks by publishing the Taha market reference rate. Since February 7, 2024, this measure has been part of a new monetary policy framework aimed at targeting interest rates. In the first quarter, Taha played a crucial role in market transparency and in facilitating transactions between banks.

The introduction of the Taha rate aims to promote exchanges between banks. This is why the interbank reference rate is more advantageous than the rates of the BFM’s standing facility instruments. For example, the Central Bank currently posts a lending facility rate of 11.5 % and a deposit facility rate of 9.5 %, while the Taha rate for interbank transactions, whether for deposits or loans, was 10.5 % on August 22.

Among the thirteen territorial banks, eleven have been consistently active in the interbank market. Three of them have exclusively positioned themselves as lenders, three others as borrowers, while five banks alternated between the two roles depending on the day.