In 2005, the Basel Committee became concerned that banks were reducing their capital requirements by shifting exposures from the banking book to the trading book. Structured products whose values depended on the credit worthiness of companies were increasingly put under trading book. The products were less liquid than other instruments in the trading book.
This included drawing up an operational framework through consultations with the banking community; establishing the MOS as an IT platform for auction-based monetary operations; and developing a model for domestic liquidity forecasting to guide our daily monetary operations. In other words, years of preparation culminate in today’s MOA signing.