Wednesday, January 27, 2016
In a Bank of Jamaica (BOJ) discussion paper titled, “Relaxing the Limits on Investment in Foreign Currency Assets for Pension Funds and Insurance Companies”, scripted in 2015 and now available online, the central bank expresses the fear that removing the investment cap for the two sectors will cause macro-economic challenges — threatening the Net International Reserves (NIR) and potentially destabilising the bond markets.
It has issued the paper outlining its position, inviting the response of stakeholders as one of a number of steps left to be taken before making a decision on the cap.
The BOJ has committed to a timetable for relaxing the cap on investments in foreign currency instruments for security dealers (SDs) and collective investment schemes (CIS) from five per cent of assets to at least 25 per cent by end 2015, and removing the cap by end 2016.
The initiative is part of the wider financial sector partially aimed at providing more investment options and easing a push to reduce retail repo investments.
Leave A Comment