The Bank of Papua New Guinea (BPNG) and Papua New Guinea’s commercial banks have signed a Master Repurchase Agreement (MRA) establishing a framework for collateralised borrowing and lending between banks and with the central bank. The arrangement allows interbank repo and reverse repo transactions to be backed by Government Inscribed Stock, with the stated objective of reducing counterparty risk and supporting a deeper interbank market. Interbank lending in Papua New Guinea had traditionally been conducted on an outright, uncollateralised basis. The MRA builds on the Bilateral Repurchase Agreement introduced in 2019, which applied only to transactions between each commercial bank and BPNG, by extending repo functionality to transactions directly between commercial banks and aligning the framework with international standards. BPNG plans to integrate MRA operations into the Central Securities Depository system portal later in 2025 to enable online transactions. By December 2025, BPNG aims to annex the MRA into the Global Master Repurchase Agreement to fully align the framework with global best practice.
Bank of Papua New Guinea 2025-09-22
Bank of Papua New Guinea signs Master Repurchase Agreement with commercial banks to enable collateralised interbank repos
The Bank of Papua New Guinea and commercial banks have signed a Master Repurchase Agreement to facilitate collateralised borrowing and lending, using Government Inscribed Stock to reduce counterparty risk and deepen the interbank market. The agreement extends repo functionality to direct transactions between commercial banks and will integrate into the Central Securities Depository system by late 2025, with plans to align with the Global Master Repurchase Agreement by December 2025.