Withdrawing liquidity is only possible through depositing liquidity from banks in the CBE.
Based on this simple principle, determine whether the following sentences are true or false with an explanation:
1. The Egyptian government borrowed EGP 61 billion in the last tender to withdraw liquidity False. Individuals and companies loan funds to the government and the government will pump it into the state through current and investment spending.
2. The Egyptian government borrowed EGP 61 billion and deposited EGP 30 billion into the consolidated account with the CBE. (Cash was withdrawn = EGP 30 billion) True. Cash transfer to the CBE = liquidity withdrawal.
3. A certificate of 18% was offered for a year to withdraw liquidity False. Even if the cash goes from the depositor’s house in the form of a banknote to the bank, the money deposited in the certificate is available for lending by the bank and thus pumped back into the economy. In order for it to be classified as a cash withdrawal, the proceeds of the certificates must be deposited with the Central Bank.
4. The CBE withdraws 100 billion pounds through the weekly bid. True. The cash was transferred from the banks to the CBE for a week, so it cannot be loaned during this period.
Summary Liquidity is not withdrawn unless it is deposited with the Central Bank. The central bank is the one that issues and withdraws liquidity. Transfers from an individual to an individual or from an individual to a government or from an individual to a bank are nothing but a cash exchange and not a cash withdrawal.