(Business in Cameroon) - Commercial banks’ growing attraction for weekly liquidity injection operations organized by the Bank of Central African States (BEAC) is affecting the interbank market. In its recently published report on the state of the money market as of end-December 2021, the BEAC points at a 25% month-to-month drop in activities on the interbank market.
“In December 2020, the volume of interbank operations dropped to XAF92.3 billion (-25%), against XAF115.4 billion a month earlier,” the BEAC report reads. Over the same period, the average volume of liquidities injected by the central bank rose to XAF387.6 billion, up from XAF357.1 billion, which is an over 30 billion growth.
This means that commercial banks prefer the BEAC liquidity injections, which carries interest rates closer to key rates, to the funds they could have obtained from peer banks through the repo system-a system through which the borrower submits securities against the cash provided by the lender- thanks to which the market started recording outstanding performance in 2019.