The Reserve Bank of Australia building in Sydney, Australia, on Monday, Sept. 6, 2021. Australia's central bank intends to change the way it provides liquidity to the banking system, moving to one that provides ample liquidity through regular money market operations.Australia's central bank intends to change the way it provides liquidity to the banking system, moving to one that provides ample liquidity through regular money market operations.
Instead, it will shift over time to a system of ample reserves in which banks' demands for reserves are satisfied via open market repo operations at a price near the cash rate target, in what are known as full allotment auctions. The RBA flooded the financial system with cash during the pandemic and those reserves held by banks are slowly dwindling as emergency loans are repaid to the central bank.
It was also more resilient to any future expansion in the RBA's balance sheet if, for example, there was a need to address extreme stresses affecting bond markets, such as at the onset of the pandemic.