(23 May 2008 – Australia) The Federal Government has announced that it will increase its issuance of securities, with future issuances up to $25 billion.The Federal Government said that the issuance of Commonwealth Government Securities (CGS) is part of their commitment to the effective operation of Australia’s financial markets.
It follows consultations with market participants about the adequacy of the supply of CGS.
Because they are risk-free, Australian Government Treasury Bonds are the benchmark used by participants in Australia’s financial markets to set interest rates beyond the short end of the yield curve, including in the bond futures market.
The Treasurer, Wayne Swan, said that the Australian Government is committed to ensuring that its bonds can play this role efficiently.
The existence of an active and efficient bond market alongside the banking system strengthens the robustness of Australia’s financial system and reduces its vulnerability to adverse shocks, Swan added.
The Government will also widen the range of the investments of the Australian Office of Financial Management (AOFM). By doing so, it will be able to better offset the cost and risk of the additional issuance.