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Credit Auction Arrangement (CAA)
The Credit Auction Arrangement (CAA) is a termed liquidity management tool introduced by the Central Bank of Seychelles (CBS) effective October 2009 in line with the continuing monetary policy reforms of 2008.
Similar to the Deposit Auction Auction (DAA), the CAA is an open market operation with the interest rate generated from the auction process. However, it is different as it serves the reverse function of the DAA, that is, the CAA addresses systemic liquidity shortages in the system by auctioning funds for a predetermined period to banks against eligible collateral. Collateral requirements are outlined in by the ' Determining Collateral Haircuts & Market Value ' document.
The CAA is also classed as a lending facility such as the Standing Credit Facility (SCF) and the Emergency Loan Facility (ELF). However, the use of the CAA is initiated by CBS and not the banks, with its necessity based on the prevailing monetary and liquidity stance of CBS.