Financial Markets

The Financial Markets Department performs three main functions which are stipulated in the Bank of Namibia Act, no. 15 of 1997, and Payment System Management Act no. 18 of 2003. More specifically, the Department carries out the following functions:

• the management of foreign exchange reserves,
• the issuance and management Government domestic debt securities including the development of money and capital markets in Namibia, and
• ensuring the overall effectiveness and integrity of the National Payment System

In managing foreign exchange reserves, the Bank of Namibia ensures that the country maintains and supplies foreign currencies to pay for Government of the Republic of Namibia and private sector’s imports, foreign services and meet all its foreign liabilities. Foreign exchange also plays a critical role in the Namibian economy in that it serves as a formal backing for the domestic currency to support the current monetary arrangement, that is., one-to-one pegging of the Namibia dollar to the South African Rand.

In issuing and managing Government domestic debt securities, the Bank of Namibia helps the Government in borrowing in local market to cover its budget deficit. In so doing the Bank ensures that the market for these securities run smoothly and is sufficiently developed to ensure constant and affordable availability of funds for Government borrowing. In relation to this, the Bank advises Government on suitable borrowing and/or suitability of borrowing. In addition, the Bank provides advisory services on foreign debt hedging.

In its payment system function, the Bank ensures that there is sufficient liquidity in the real time gross settlement system called Namibian Inter-bank settlement system (NISS) which is run and administered by the Bank of Namibia. A related function is that of oversight which entails proactive measures to ensure that payment system risks are anticipated and avoided where possible and/or its impact is minimized. This is to enhance market confidence in the local financial markets.