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Argentina's central bank alleviates reserves requirements

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Argentina's central bank alleviates reserves requirements

Banco Central de la República Argentina lowered its minimum reserve requirements for public banks on May 30, a measure which is expected to release 20 billion Argentine pesos in funding as of June, El Cronista reported.

The regulator reportedly cut cash levels demanded on judicial deposits by 1%, which typically hold a larger reserves requirements than regular ones.

The decision, which brings down the minimum threshold to 32% on the shortest term deposits, is expected to provide some relief for public banks in terms of liquidity, since they hold the majority of this type of accounts.

Additionally, the institution cleaned up a regulatory norm which labeled payments from credit cards collected by merchants as deposits, thus requiring banks to park a portion of those funds. Effective June 1, banks are no longer required to reserve funds for one-installment transactions.

These adjustments follow a move from the BCRA last week, when it decided to reward financial entities with lower minimum reserves as long as they channeled funds into the crestfallen SME segment.

As of May 30, US$ 1 was equivalent to 44.36 Argentine pesos.