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The Bank of Canada is changing two of its operational procedures relating to LVTS, effective 2 April 2001. First, the Bank will discontinue the second round of Special Purchase and Resale Agreements or Sale and Repurchase Agreements except in extraordinary circumstances. The need for a second round, which was initiated in September 1999 to reinforce the Bank’s objective for the overnight interest rate, has diminished markedly.
Second, the Bank of Canada will target a minimum daily level of settlement balances of $50 million (instead of zero) on a trial basis to reduce frictions in the system. The Bank will continue to target a higher level of balances on days when overnight funding is expected to be tight. As has been the recent practice, the target balance will be announced by 4:30 p.m. the previous day on the Bank of Canada's website.