Serbian outstanding repo stock, or surplus liquidity commercial banks park with the central bank, has fallen to its lowest level since the Balkan nation adopted inflation targeting as its monetary policy framework in 2006.
The outstanding repo stock contracted to 26.45 billion dinars ($283.4 million) from 30.7 billion dinars on June 6 and compared with 137.2 billion dinars at the start of 2012, according to the report posted by the Belgrade-based Narodna Banka Srbije on its website today.
The stock, which the National Bank of Serbia treated as an important liquidity buffer in 2008 and 2009, when the country was affected the most by global financial turmoil, has continued to decline even after the central bank raised its benchmark interest rate, the two-week repurchase rate by a half-point to 10 percent on June 7.
The central bank introduced inflation targeting in August 2006 and has mainly used open market operations for reverse repo transactions to sap excess liquidity from the banking system.
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