An International Monetary Fund paper, published on January 31, argues that while there are practical reasons for using central bank bills, Treasury bills are the first best tool to drain excess liquidity in the financial sector and the rest of the economy.

Obert Nyawata, the paper's author, examines whether central banks should use Treasury bills or central bank bills for draining excess liquidity in the banking system. The circumstances under which many central banks have started issuing their