Open Market Operations and Repo Markets: A Foundational Training Course

Introduction

Open Market Operations (OMOs) and repurchase agreements (repos) are the primary tools used by central banks to manage liquidity and implement monetary policy. This training course offers a practical and in-depth look into the mechanics of these operations, exploring how they are used to influence short-term interest rates and steer the economy toward policy goals. Participants will gain a robust understanding of how central banks interact with the financial system to inject or withdraw liquidity, ensuring the smooth functioning of money markets.

Beyond the daily operational aspects, the program will delve into the strategic role of repo markets in the broader financial landscape. We will examine the different types of repos, the role of collateral, and the importance of these markets in providing short-term funding for banks and other financial institutions. By combining theoretical knowledge with practical examples, this course is designed to equip policymakers, financial professionals, and analysts with the skills needed to navigate the complexities of money market operations and understand their profound impact on financial stability.

Target Audience

  • Central bank financial market staff
  • Commercial bank treasury professionals
  • Financial market regulators and supervisors
  • Portfolio and fund managers
  • Risk managers and credit analysts
  • Academics and students of finance
  • Government treasury and finance officials
  • Financial journalists

Duration

5 days

Course Objectives

Upon successful completion of this training, participants will be able to:

  • Explain the core principles of open market operations and liquidity management.
  • Describe the mechanics of repurchase agreements (repos) and reverse repos.
  • Analyze how OMOs are used to influence the policy interest rate.
  • Evaluate the role of collateral in repo markets.
  • Discuss the operational challenges of implementing monetary policy.
  • Assess the relationship between repo markets and financial stability.

Modules Course Content

Module 1: Foundations of Monetary Policy Implementation

  • The central bank's role in the financial system
  • The concept of liquidity and its importance
  • The policy interest rate and its transmission
  • The difference between conventional and unconventional tools
  • The operational framework of a central bank

Module 2: Open Market Operations (OMOs)

  • The purpose and types of OMOs
  • The mechanics of outright purchases and sales
  • The impact of OMOs on bank reserves
  • The central bank's balance sheet and OMOs
  • The role of OMOs in managing market rates

Module 3: Repurchase Agreements (Repos) - An Introduction

  • Defining a repo transaction
  • The role of repos as a collateralized loan
  • The types of repos (e.g., general collateral, special)
  • The role of collateral and haircuts
  • The use of repos for short-term funding

Module 4: The Repo Market Ecosystem

  • Key participants in the repo market
  • The role of a central counterparty (CCP)
  • The importance of the repo rate
  • The relationship between the repo market and other money markets
  • The use of tri-party repo

Module 5: Reverse Repos and Liquidity Management

  • The mechanics of a reverse repo
  • The use of reverse repos to withdraw liquidity
  • The central bank as a counterparty
  • The role of standing facilities
  • The relationship between reverse repos and central bank liabilities

Module 6: Collateral Management

  • What constitutes eligible collateral
  • The process of collateral valuation
  • The role of haircuts and their economic meaning
  • Managing collateral risk
  • The impact of collateral scarcity

Module 7: Market Analysis and Forecasting

  • Forecasting liquidity needs and surpluses
  • Interpreting market signals from the repo rate
  • Analyzing central bank announcements and their impact
  • The use of market intelligence for policy decisions
  • The relationship between repos and the yield curve

Module 8: The Repo Market and Financial Stability

  • The role of the repo market in a financial crisis
  • The central bank as a lender of last resort
  • The risks of a repo market failure
  • The impact of regulations on repo markets
  • The challenges of managing systemic risk

Module 9: Non-Conventional Repo Operations

  • The use of repos in quantitative easing (QE)
  • The role of term repos during a crisis
  • The expansion of collateral eligibility
  • The implementation of targeted repo operations
  • The exit from non-conventional operations

Module 10: Case Studies and Best Practices

  • The US Federal Reserve's repo operations
  • The European Central Bank's refinancing operations
  • The lessons from the 2008 financial crisis
  • The challenges of implementing repo operations in different economies
  • Best practices for managing a central bank's repo book

CERTIFICATION

  • Upon successful completion of this training, participants will be issued with Macskills Training and Development Institute Certificate

TRAINING VENUE

  • Training will be held at Macskills Training Centre. We also tailor make the training upon request at different locations across the world.

AIRPORT PICK UP AND ACCOMMODATION

  • Airport Pick Up is provided by the institute. Accommodation is arranged upon request

TERMS OF PAYMENT

Payment should be made to Macskills Development Institute bank account before the start of the training and receipts sent to info@macskillsdevelopment.com

For More Details call: +254-114-087-180

 

Open Market Operations And Repo Markets: A Foundational Training Course in Kenya
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