EXCLUSIVE – No immediate changes to Austria’s cash policy, but changes due before April 2023 – Cash


By Yoruk Bahceli

September 9 (Reuters)Austria’s Treasury said on Friday it would not immediately change its cash management strategy in response to the European Central Bank’s rate hike, given the central bank’s decision to pay interest on government deposits. .

He will however decide on the changes as the arrangement is temporary, and will do so well before 2023, a senior Treasury official told Reuters.

The European Central Bank announced on Thursday that it would pay interest on cash deposits from eurozone governments until April 2023, temporarily removing a 0% cap after raising rates by an unprecedented 75%. basis points.

The move follows concerns that if it hadn’t removed the cap, rising rates would have encouraged governments to deplete cash as it would have been more cost-effective to deploy it in markets, exacerbating a shortage of bonds being used. as collateral in the block.

“Because of this decision yesterday, there is no need to change the (cash management) strategy immediately,” Markus Stix, director general of the Austrian Treasury, told Reuters.

He cited the need for a cash reserve given that the Treasury must fund government spending, including spending to combat energy costs and inflation.

Stix said the Treasury is currently considering various options, including one to reduce its cash position by reducing repo facilities and moving to the lending facility instead, but no decision has yet been made.

This would mean that it would switch from lending securities in exchange for cash to lending against other securities.

Austria will make a decision and implement it well before the ECB’s interest payment agreement expires on April 30, 2023, Stix said, citing uncertainty over the market’s reaction at that time. the.

As part of its current cash management strategy and once the ECB rate hike applies to the markets from next week, it could also shift cash to time deposits, treasury bills other governments and commercial paper, depending on the setting of money market rates, Stix added. .

(Reporting by Yoruk Bahceli; editing by Dhara Ranasinghe and Tomasz Janowski)

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