KARACHI, Aug 29: The State Bank of Pakistan said on Friday it planned to start issuing short-term certificates of deposit shortly to absorb liquidity and manage interest rates, prompting relief from a market desperate for investment targets.

“We are in the final stages of issuing our own short-term certificates of deposit,” Zafar Shaikh, head of Treasury at the State Bank of Pakistan, told Reuters. “They will serve as an additional tool for prudent interest-rate management.”

The country’s banking system is flush with liquidity, mainly due to higher remittances from Pakistanis abroad — boosted by more stringent anti-money laundering measures — lower government borrowing and a lack of attractive investment opportunities.

Shaikh said the short-term certificates of deposit (CDs) would give relief to the market and were expected to be launched some time in September.

Bankers said the CDs were likely to be launched in the first half of September, have a minimum one-month maturity period and be sold through open market operations.—Reuters