Central Bank of Iceland offers to purchase euros
The Central Bank of Iceland is offering to purchase euros against payment in Treasury bonds. The auction is an element in the removal of restrictions on movement of capital as set forth in the Central Bank’s capital account liberalisation strategy, published on 25 March 2011.
Primary dealers in the bond market are invited to act as intermediaries for the transactions. The Central Bank is offering to purchase 72 million euros against payment in Treasury series RIKS 30 0701. Offers shall be submitted by August 16, 2011. Further information on the auction can be found in the Terms of Auction.
The aim of these measures is to recoup the foreign currency that the Central Bank of Iceland used to purchase krónur in the previous auction and sell krónur to buyers that are prepared to hold them for at least five years. This is done by offering parties that own foreign currency not subject to repatriation requirements the opportunity to purchase long-term Treasury bonds that will be held in custody for five years. The measures also help to provide the Treasury with economical long-term funding, thus reducing its re-financing need while the capital controls are being lifted.
Terms of Auction for this Central Bank auction: Terms of Auction 16 August 2011
Terms of issuance for this Treasury bonds: Description of RIKS 30 0701
Central Bank of Iceland capital account liberalisation strategy, dated 25 March 2011
Further information can be obtained from Már Guðmundsson, Governor of the Central Bank, and Sturla Pálsson, Director of the International and Market Operations Department of the Central Bank, at tel +354 569-9600.
August 2, 2011