THE Bank of Guyana (Amendment) Bill 2018, which seeks to amend the Bank of Guyana Act Chapter 85:02 by explicitly giving the bank the power to provide temporary liquidity assistance to deposit-taking financial institutions, was on Thursday read for the first time in the National Assembly.

According to Finance Minister Winston Jordan, the legislation is an integral means employed in maintaining the stability of the system. The Explanatory Memorandum of the Bill explains that Clause 2 of the Bill amends Section 40 of the Principal Act to expand the open-market and credit operations of the bank to better reflect the monetary operations of a modern Central Bank.

Clause 3, on the other hand, amends Section 41 of the Principal Act to explicitly allow the bank to grant, in exceptional circumstances, temporary liquidity assistance to financial institutions which take deposits against a wider range of collateral, and for longer periods than what is accepted in the normal liquidity-providing facilities.

It also gives the bank the power to grant financial assistance when it is necessary to preserve the stability of the financial system, and offers protection to the Bank of Guyana as it prescribes that all assistance in this instance requires a government guarantee.
Clause 4 of the Bill amends Section 42 of the Principal Act to remove the rates of interest charged for rediscounting eligible paper under Section 40.

“As Section 40 will be substituted for a new Section 40, this is a consequential amendment,” the explanatory memorandum states.

Clause 5 of the Bill amends Section 56 of the Principal Act to allow the bank to secure the credit granted to a financial institution on real property, and to acquire such real property if the institution defaults. The bank, however, is required to dispose of such property at the earliest suitable opportunity.