BPNG, Commercial Banks Sign Landmark Master Repurchase Agreement

BPNG, Commercial Banks Sign Landmark Master Repurchase Agreement
The Bank of Papua New Guinea (BPNG) has signed a master repurchase agreement with the country’s commercial banks in a move set to transform the operation of Papua New Guinea’s financial system.
The agreement establishes a framework allowing commercial banks to borrow and lend to one another — as well as with the Central Bank — on a collateralised basis. Interbank transactions can now be secured with Government inscribed stock, reducing counterparty risk, enhancing confidence between financial institutions, and supporting the development of a more active interbank market.

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BPNG Governor Elizabeth Genia said commercial banks traditionally lent funds to each other outright, without any underlying collateral. “Collateralised repos and reverse repos remove counterparty risk and lay the foundation for a deeper and more liquid interbank market,” she said.
The agreement builds on the bilateral repurchase agreement introduced in 2019, which only applied to transactions between commercial banks and the Central Bank. “The new master repurchase agreement extends this to transactions directly between commercial banks, aligning PNG with international standards,” Genia said.
The governor said the next step will see these operations integrated into the Central Securities Depository system portal later this year, enabling online transactions. “By December 2025, BPNG aims to annex the agreement into the global master repurchase agreement (GMRA), fully aligning Papua New Guinea with global best practice,” she added.
Genia expressed gratitude to the BPNG team, the International Monetary Fund technical assistance team, and the commercial banks for delivering the reform. “The agreement, signed with all our commercial banks, strengthens the foundation of our banking system and will support the stability and resilience of Papua New Guinea’s financial system for many years to come,” she said.

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