The International Bank for Reconstruction and Development (IBRD) intends to expand the range of borrowings from central banks with the launching in early 1984 of a short-term, variable rate, bill program. The program, to be known as the Central Bank Facility (CBF), will offer 12 month, U.S. dollar denominated, bills up to a maximum volume of $750 million with interest pegged to 12-month U.S. Treasury bills.
Under the CBF the purchasers will be able to redeem the new bills at very short notice without penalty payment and with fully accrued interest. Instead of attaching a fixed rate to the bills, the IBRD will adjust the rate on these new bills each month, with the yield calculation based on a margin, yet to be established, above the prevailing rate on 12-month U.S. Treasury bills.
The new bills will supplement the two-year IBRD notes that have traditionally been offered to central banks. These new bills will provide central banks with increased flexibility in managing their own liquidity.