The Financial Markets Department implements monetary policy decisions, manages the country’s official reserves and, as an agent of government, issues and manages government debt securities.
The department has the following responsibilities:
The Central Bank of Swaziland order of 1974 mandates the Bank to hold and manage the country’s foreign reserves. The rationale for holding foreign exchange reserves differs from country to country. Since Swaziland operates a fixed exchange rate regime where the Lilangeni is pegged one-to-one with the South African Rand, a stock of liquid foreign currency assets is required to manage imbalances in the demand for, or supply of, the Lilangeni in order to maintain the exchange rate peg.
The Central Bank of Swaziland, therefore, holds reserves for the purposes below:
A domestic market is a financial market within a given country also known as domestic trading. It is a country’s internal market, representing the mechanisms for issuing and trading securities of entities domiciled within that nation. The domestic market has a more limited scope than international markets.
The savings constraint is a key impediment to financial market deepening and development of the domestic market. Low savings result in a low level of financial intermediation by banks
The Central Bank of Swaziland as fiscal agent for the Government is responsible for raising funds in the domestic market by issuing Government securities namely treasury bills and Government bonds. The issuance of these securities is facilitated by the Domestic Markets Office under the Central Bank’s Financial Markets department. These Government securities are a major means of financing Government deficits and they further provide additional investment avenues for investors. Government securities are the most secure investment by far since it is rare for the government to default or honour its obligations. In Swaziland, treasury bills and bonds are issued under the provision of the Treasury Bills and Government Stock Act of 1994 (Amended in 2010) which sets a debt ceiling for the Minister of Finance at 25 percent of GDP.