The Monetary Authority of Maldives (MMA) has approved an open market operation to reduce the excess money in the banking system, caused by the overdraft of public bank accounts and the printing of money under the previous government.

The banking system's surplus liquidity has increased due to money printing to manage the government's cash flow. By the end of July, surplus liquidity in the banking system averaged MVR 6.7 billion.

The MMA said in early September that open market operations would be launched this year to mitigate the challenges posed by the surplus.

Governor Ahmed Munawwar told the media today that the open market operation would make it difficult for the government to manage its cash flow. However, the printed currency will not be reduced all at once.