Jordan’s cash market liquidity management is about to change dramatically as the central bank of the nation rolls out new monetary policy instruments.
In compliance with Sharia regulations, the Jordanian Central Bank has launched these products in association with local Islamic banks. According to the Jordan News Agency, the objective is to improve the efficacy and efficiency of liquidity management in the cash market.
The implementation of these new standards will help Islamic banks create an efficient interbank market in addition to helping them manage liquidity more flexibly.
The central bank will be able to supply Islamic banks with daytime, overnight, and up to one week’s worth of liquidity within the parameters of these tools.
The apex bank may choose to take the initiative or follow the demands of the banks in this regard, giving flexibility about time, quantity, and length. When determining these characteristics, the Central Bank of Jordan will take into account its operational goals for monetary policy implementation.
The central bank made this decision as part of its attempts to expand the range of instruments at its disposal and create the operational framework for monetary policy. The decision reportedly satisfies the unique requirements of the regional cash and banking market while adhering to the best practices of central banks.
In a parallel move, sixteen Jordanian banks joined forces to establish the country’s first private sector investment fund earlier in January 2024, contributing USD 388 million to support the expansion of regional companies.
According to the state news agency, the Jordan Capital and Investment Fund, which was founded in 2021 with a capital commitment of 275 million dinars (USD 387.6 million), was formally registered under the 2022 Investment Environment Law.
According to an official statement obtained by the Jordan News Agency, the instrument intends to infuse capital into nascent businesses with growth, development, and expansion prospects, offering financing to improve job opportunities and spur national progress.
Being the first and biggest private sector investment fund in the nation, its purpose is to provide capital to important and promising industries like manufacturing, information and communication technology, and food and health security. It also stated that the goal is to fully utilise Jordan’s ability in creating the future.
At the time, the chairman of the Jordan Capital and Investment Fund, Hani Al-Qadi, stated that the fund is essential to utilising Jordan’s economic potential to achieve “rapid growth.”