Suriname: Technical Assistance Report-Liquidity Forecasting and Participation in Money Market Operations
Technical Assistance Reports, May 7, 2025
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Bibliographic details
- Published: May 7, 2025
- Series: Technical Assistance Reports
- DOI: https://doi.org/10.5089/9798229009843.019
Background and context
- The Central Bank of Suriname (CBvS) shifted from an exchange rate regime to a monetary targeting regime in 2021.
- The objective of the shift was to stabilize inflation and manage liquidity effectively following the Suriname dollar's sharp depreciation and high inflation.
- The CBvS introduced Central Bank Certificates (CBCs) in 2022 and increased reserve requirements in 2023 to address excess reserves.
- Persistent operational challenges included low engagement in auctions and high bid rates, complicating liquidity management.
Mission scope and approach
- The mission supported the CBvS by introducing an advanced statistical framework for liquidity forecasting and by assessing challenges to money market participation.
- Collaborative engagement included surveys and workshops with commercial banks to identify constraints, gather feedback, and improve understanding of the monetary policy framework.
Liquidity forecasting framework
- The forecasting framework integrates 12 forecasting models to produce reserve money projections.
- Expected benefits highlighted:
- Enhanced accuracy of reserve money projections.
- Improved operational efficiency in liquidity management.
- Better-informed decision-making on the use of monetary policy instruments.
Money market participation findings
- Identified obstacles to effective money market functioning:
- Low engagement in auctions.
- High bid rates at CBC auctions.
- Structural and infrastructure limitations in the banking system affecting participation and intermediation.
Policy recommendations and operational priorities
- Review the use and design of Central Bank Certificates (CBCs) to improve auction participation and bid characteristics.
- Improve liquidity forecasting capacity and embed the 12-model framework in operational routines.
- Modernize banking infrastructure to facilitate better alignment with CBvS policy objectives and to enhance the effectiveness of the monetary system.
- Continue bank outreach (surveys and workshops) to address commercial banks’ concerns and improve participation in money market operations.
Content in this bundle
- tarea2025050-print-pdf