RBZ Facility to Plug Funding Gaps.

Key Points from Dr. John Mushayavanhu:

💠Purpose of the Targeted Finance Facility (TFF):
-Addresses structural inefficiencies in the banking sector rather than increasing money supply.
-Redistributes excess liquidity in the market.

💠Current Liquidity Situation:
The market has had over ZiG1 billion in excess liquidity daily since September.
-RBZ sterilises excess liquidity through non-negotiable certificates of deposit (NNCDs) at zero interest.

💠Bank Lending Dynamics:
-Banks prefer parking funds in NNCDs over engaging in medium- to long-term interbank lending.
-Dr. Mushayavanhu criticised banks for not lending to each other, which could generate interest income.

💠Implementation of TFF:
-TFF redistributes excess liquidity to banks with genuine lending opportunities.
-Designed to promote the productive sector and increase the use of the ZiG currency.

💠Future Outlook:
-The TFF supports monetary stability and addresses funding gaps in productive sectors.
-Ensures optimal liquidity management while avoiding inflationary pressures.

Dr. Mushayavanhu emphasised the importance of bank collaboration to enhance medium-term lending and improve the efficiency of liquidity redistribution.