The Reserve Bank on Thursday said it would rationalize existing regulations covering different money market products to improve transparency and safety of money markets. A well-functioning money market is a crucial link in the chain of monetary policy transmission, apart from being a basic necessity for pricing and liquidity in other financial markets, the RBI said. Over time, the central bank has issued regulations covering different money market products – call money, repo, commercial paper, certificates of deposit, and other debt instruments with an original maturity of less than one year. “To bring consistency across products in terms of issuers, investors and other participants, it is proposed to rationalize existing regulations covering different money market products,” it said.
The RBI observations in a statement on developmental and regulatory policies issued after the Monetary Policy Committee meeting here. The directions would improve transparency and safety of money markets, it added. The RBI further said foreign exchange trading platform for retail participants would be available to users for transactions from early August 2019. The Clearing Corporation of India
Ltd has now developed the trading platform (CCIL) and is being tested by users. The central bank has also decided to constitute an internal working group to comprehensively review the existing liquidity management framework and suggest measures to simplify the framework; and communicate the objectives, quantitative measures, and tool kit of liquidity management by the RBI. The internal working group is expected to submit its report by July 2019.