I have read today that the treasury of my home country (not the US) started to buy back a significant amount of its Treasury securities (bonds, notes ...) from their owners. My question is what happens at a microeconomic scale after the Treasury redeems back its treasury securities ? I've actually read that Central Bank along with the Treasury both agreed and decided to do so before starting printing any new money, I wonder thus why? and why this timing in particular? Why do they have to spend money in order to print new money?

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    $\begingroup$ The statement “ I've actually read that Central Bank along with the Treasury both agreed and decided to do so before starting printing any new money,“ does not make sense to me. Could you please give the original phrasing (translated)? $\endgroup$ Apr 7, 2020 at 23:27
  • $\begingroup$ @BrianRomanchuk "All available sources of liquidity must be exhausted before resorting to money creation, which can be a source of inflation. This is why the Treasury, the Central Bank and market operators consult regularly." $\endgroup$
    – sasuke
    Apr 8, 2020 at 10:43
  • $\begingroup$ That policy makes no sense to me. The Treasury would be consuming its liquidity by buying back debt. The only way this sort-of makes sense is that the central bank is buying existing debt. Do you have a link to the original articles describing this policy? I think I would want to read the original, to see if there is something missing. $\endgroup$ Apr 8, 2020 at 17:30
  • $\begingroup$ @BrianRomanchuk it's in french, i guess you can translate into english and then have a look at it. I would love to have your take on it and what do you think about it : leboursier.ma/… $\endgroup$
    – sasuke
    Apr 8, 2020 at 23:46

1 Answer 1


The following link was provided: Link to Moroccan news article, in French

My French is somewhat rusty, and I am completely unfamiliar with the structure of the Moroccan financial system. But I think I understood the basic idea.

As a result of the worries around COVID-19, there was added demand for liquidity in the banking system. The Treasury sits on a buffer of cash (presumably sitting at the central bank). What it is doing is using that buffer to purchase back some short maturity bonds. This injects money into the banking system, which can then be used for liquidity management, or to buy newly-issued long-term Treasury bonds.

The central bank could have done this, but since the Treasury presumably had cash reserves, it did the operation.

From a theoretical point of view, it would not matter whether these bond purchases were done by the central bank or the Treasury - in either case, the private sector is exchanging bonds for cash. However, the central bankers might not agree with that assessment, and there may be institutional rules (that I am unaware of) in Morocco that pushed the Treasury to do this.

Generally speaking, in the developed countries, the central bank would handle such an operation, and the Treasury would not get involved. The closest operation I can think of is in Canada, where the Ministry of Finance lends to the private banks out of its balance at the Bank of Canada.

  • $\begingroup$ Does this has anything to do with the concept of "Quantitative easing" please? $\endgroup$
    – sasuke
    Jul 2, 2020 at 23:53
  • $\begingroup$ QE is the central bank buying government bonds. From the private sector standpoint, it looks the same - they sell bonds, receive money in return - but the government/central bank balance sheets look different. $\endgroup$ Jul 3, 2020 at 2:23

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