Central Bank offers CBB - Tap facility to boost government securities retail market

Central Bank

The Central Bank Bill (CBB-Tap) is a tool introduced by Bank of Papua New Guinea (Central Bank) for managing liquidity, the amount of money circulating in the economy.

According to the manager of Money Market Operations Unit of the Central Bank, Ms Winnie Linken, the CBB-Tap facility aims to provide greater chances for ordinary people to invest thus boosting the retail market in PNG.

This was revealed in the recently concluded investment seminar, conducted by Port Moresby Stock Exchange (POMSox) in collaboration with Kina Securities and the Central Bank.

“The objective of CBB-Tap is to provide small investors in the retail market an alternative investment product and assist in developing a savings culture for Papua New Guineans.

In doing so, the facility could help in liquidity management, contributing towards transmitting the central Bank’s policy rate to market rates. This would assist in meeting the Bank’s price stability objective” Ms Linken said.

Very few Papua New Guineans know about Government Securities such as treasury bills and inscribe stocks are and the few that do are either employers of organizations dealing with government securities or experienced investors or companies. Ms Linken discussed in length what treasury bills and inscribed stocks are and the procedures involved in investing in those assets.

Treasury bills are a discounted paper or security issued by the government. By issuing the Treasury Bills, the government borrows cash from investors and repays with interest later with revenue generated from taxes and other sources. Investment in Treasury Bills is open to general public as well as organizations.  Treasury Bills is traded at a yield.

Inscribed stock is a medium to long term debt instrument or Kina denominated bond with maturities of up to 17 years. It is a loan to the Government that earns interest semi-annually and is repayable on the maturity date. Inscribed Stock is traded at a price.

“These are low risk investments but you also need to do your own research and consider other options before investing your money with Bank of PNG who are the legitimate dealers of government securities” Ms Linken concluded.