Media Release |
BPNG, Banks Sign Landmark Agreement to Strengthen Financial System
The Bank of Papua New Guinea (BPNG) and the country’s commercial banks have reached a historic milestone with the signing of a Master Repurchase Agreement (MRA), a development that will transform the operation of Papua New Guinea’s financial system.
The MRA establishes a framework that allows the commercial banks to borrow and lend to one another - as well as with the Central Bank - on a collateralised basis. This means interbank transactions can now be asset backed by Government Inscribed Stock, removing counterparty risk, building confidence between financial institutions and supporting the development of a deeper and more active interbank market.
Governor Elizabeth Genia said the commercial banks had traditionally lent funds to each other on an outright basis with no underlying collateral. “Collateralised repos and reverse repos remove counterparty risk and lay the foundation for a deeper and more liquid interbank market,” Governor Genia said.
This achievement follows the introduction of the Bilateral Repurchase Agreement in 2019, which only applied to transactions between each commercial bank and the Central Bank. The new Master Repurchase Agreement extends this to transactions directly between the commercial banks, aligning PNG with international standards.
The next step will see these operations integrated into the Central Securities Depository (CSD) system portal later this year, enabling online transactions. By December 2025, BPNG aims to annex the MRA into the Global Master Repurchase Agreement (GMRA), fully aligning Papua New Guinea with global best practice.
Governor Genia expressed her appreciation to the BPNG team, the IMF Technical Assistance Team and the commercial banks for their cooperation in delivering this landmark reform.
“This is a truly historic moment. 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.
Authorised by:
Ms Elizabeth Genia
Governor
Media enquiries:
Margaret Bacca or Rosemary Lalaga
Ph: 322 7648 / 7516 (direct landline) or 78686563 / 78378273 (cell) Email: mbacca@bankpng.gov.pg / rlalaga@bankpng.gov.pg