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Brazil central bank eases reserve requirements for banks' time deposits

Banco Central do Brasil has relaxed some reserve requirements for time deposits, effective July 1, that will result in savings of up to 8.2 billion reais for local lenders.

Specifically, the central bank will exclude from its calculation interbank deposits made by commercial leasing companies between financial institutions operating within the same conglomerate.

Through the measure, the central bank looks to simplify and rationalize its rules as well as reduce compliance costs of banks subject to compulsory deposits.

In 2016, the National Monetary Council, or CMN, adopted a measure that prevented repurchase agreements backed by securities of related institutions or members of a conglomerate. The rule prevented commercial leasing companies from making interbank deposits at banks related to them.

The CMN rule ended in December 2018.

As of May 23, US$1 was equivalent to 4.04 Brazilian reais.