QCB rate is the interest or return rate set by Qatar Central Bank (QCB) for the daily transactions in the Qatar Money Market (QMR) i.e., it is the official short-term (Overnight) interest rate on lending ”Qatar Central Bank Lending Rate (QCBLR)” and on deposits “Qatar Central Bank Deposit Rate (QCBDR)”. Using both QCBLR and QCBDR through the QMR mechanism, local banks can (electronically) borrow from, and deposit with QCB for overnight maturity.
Banks retain with QCB amounts of compulsory reserves equal to a certain percentage of the average total deposits held by them. The ratio is calculated based on average total daily deposits on the sixteenth day of each month until the twelfth day of the following month. The amount of reserves approved applies at the start of the fifteenth day of each month. Amounts of such reserve are non-interest bearing and are in Qatari Riyals.
Qatar Money Market Rates-QMR
Lending Operations (QMRL)
Deposit Operations (QMRD)
The QMR is a monetary instrument through which local banks are allowed to deposit with; and borrow from QCB; overnight funds with a pre-specified initial interest rates and bank-by-bank ceiling.
QMR transactions are fully automated between QCB and local bank in the QMR System. Transactions are executed through the QCB-connect network as following:
A. official interest rate on deposit transactions, QCB rate on deposit (QCBDR).
B. official interest rate on loan transactions, QCB rate on loan (QCBLR).
2. QCB rates change according to maturities ranging from one night to thirty days.
Public Debit Repurchasing Operations-Repo
Repurchase agreements’ operations comprise purchases of assets by the central bank under a contract providing for their resale at specified price on a given future date and are used to supply reserves. Repos are conducted in domestic government securities, that is, loans backed by domestic assets.
Strictly speaking, repurchase transactions are classified as indirect money market instrument as they are usually initiated by commercial banks, operate through market mechanisms, and serve to manage primary liquidity in the banking system. Yet, although QCB sets, the rate and duration for repurchase agreements (a characteristic of money market instruments), the QCB Repo Rate (QCBRR) is known in advance and the size and timing of the repurchase transactions are rather initiated by commercial banks.