Monetary Policy and the Development of the Secondary Market for Central Reserve Bank of Peru Certificates of Deposit (1995–1996)

This study examines the evolution and characteristics of the secondary market for Certificates of Deposit issued by the Central Reserve Bank of Peru (CDBCRP) between June 1995 and September 1996, placing it in the context of Peruvian monetary policy and the development of monetary control instruments. Through an analysis of transaction data and the dynamics between the primary and secondary markets, it is evident that the secondary market—although still in its developmental phase—has become increasingly significant, with an increase in the amounts traded and in the participation of entities such as commercial banks and Private Pension Fund Administrators (AFPs). The methodology employed includes a comparison of transactions and interest rates between the two markets, using econometric models to assess the reaction of secondary market rates to changes in primary market rates and the interbank rate. The results indicate that secondary market rates tend to be lower than those in the primary market, and that the central bank’s participation in the secondary market can provide greater flexibility in monetary management. This research suggests that strengthening the secondary market could improve the effectiveness of monetary policy, facilitating better control over the financial system’s liquidity. (Abstract and audio: Department of Economic Publications)