The Central Bank decided this Thursday to increase the reserve ratios on the balances in paid demand accounts of Money Market Common Investment Funds from 10% to 15%.
The Central Bank (BCRA) decided this Thursday to increase the reserve ratios on the balances in paid demand accounts of Money Market Common Investment Funds from 10% to 15%.
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To maintain consistency, the BCRA also decided to apply the same reserve ratio, of 15%, to passive stock securities taken by financial entities that have a residual term of up to 29 days. Representatives of the monetary authority assured that this measure seeks to “continue moving in the direction of eliminating distortions between instruments of a similar nature.”
“The reduction in the monetary policy rate and the normalization of bank reserve requirements share a common objective in the absorption of liquidity surpluses resulting from the monetary financing of the fiscal deficit accumulated in recent years,” they noted.
The entity directed by Santiago Bausili explained that both measures reduce endogenous issuance through the remuneration of BCRA liabilities while generating incentives to seek higher returns in the capital market.
