Norway's central bank provides $2.7 billion liquidity to banks after Brexit

OSLO (Reuters) - Norway’s central bank pumped 23.2 billion Norwegian crowns ($2.73 billion) into the country’s banking system on Friday after Britain voted to leave the EU and the bank also relaxed certain requirements on primary dealers of government bonds.

The bank offered funds through two “F-loans”, the bank’s main tool for liquidity management, on Friday.

“Norges Bank has undertaken contingency planning and is monitoring developments closely. We are continuously assessing the liquidity situation,” the bank said in a statement released during trading hours.

Norges Bank later said it would relax the requirements it places on dealers of government securities, such as bonds and treasury bills, to reduce the risk from increased market volatility.

“Norges Bank has decided to allow primary dealers to quote a price spread up to two times the interest rate spreads on all government securities in the period from Monday, 27 June, to Wednesday, 29 June,” it said.

Norwegian three-months money market rates NOKIBOR= rose seven basis points to 1.09 percent on Friday, while the corresponding forward rate NOKFRA was down four points to 0.86 percent. "The rise in money market rates is ... as expected with the uncertainty in the markets after the Brexit vote," Handelsbanken strategist Nils Kristian Knudsen said.

Reporting by Stine Jacobsen, Terje Solsvik and Camilla Knudsen, editing by John Stonestreet and Jane Merriman