On the Use of Sterilisation Bonds in Emerging Asia

21 Pages Posted: 4 Jan 2013 Last revised: 5 Oct 2013

See all articles by Aaron N. Mehrotra

Aaron N. Mehrotra

Bank for International Settlements (BIS)

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Date Written: October 1, 2012


We document recent developments in the use of sterilization bonds by six central banks in emerging Asia, and discuss the implications for monetary policy and the financial sector. An important development in the sterilization of foreign exchange interventions in past years has been the frequent use of central banks’ own paper. There has been an attempt to lengthen the maturity structure of sterilization bills, and maturities have risen, especially in 2010–11. The choice of sterilization instrument is likely to depend partly on their relative costs. In particular, as the yield on central bank securities has fallen relative to the rate of remuneration of required reserves, some central banks in Asia have increasingly used central bank securities for sterilization.

Full publication: Are Central Bank Balance Sheets in Asia Too Large?

Keywords: sterilisation bond, central bank bonds and bills, foreign exchange reserves, emerging Asia

JEL Classification: E43, E50, E52, E58

Suggested Citation

Mehrotra, Aaron N., On the Use of Sterilisation Bonds in Emerging Asia (October 1, 2012). BIS Paper No. 66f, Available at SSRN: https://ssrn.com/abstract=2185367

Aaron N. Mehrotra (Contact Author)

Bank for International Settlements (BIS) ( email )

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Basel, Basel-Stadt 4002

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