Interbank transfers could paralyze in Venezuela
The Venezuelan Banking Association (VBA) warned the Central Bank of Venezuela (CBV) that the legal reserve policy puts at risk transfers between banks
In a letter addressed to the president of the Central Bank of Venezuela (CBV) Calixto Ortega, bankers explained that the legal reserve of 100% the marginal and 57% the ordinary -which has been in effect since February 11- drastically and substantially reduced the quidity of the banks, as well as their capacity to grant loans. It is the second time that they express their concern on this regard.
The drastic lace policy is causing the banks a severe tightness of liquidity which generates significant pressures on the handling of cash from banks. This event affects credit intermediation, the provision of transactional services and the cost of treasury management.
In the same way, bankers say that it is “necessary the complete cessation of the extreme requirements of reserve”, but that immediately propose a “relaxation in the current legal reserve scheme”. Therefore they ask the BCV “to establish a mechanism that gives preferential treatment to the sectors that participate in the production, distribution and commercialization of essential goods and services.”
As a result, the effective reserve requirement rate maintained by banking institutions increased significantly and rapidly. From February 11 to mid March 2019, the average weekly cash reserve rate increased by more than 10 percentage points, reaching over 60%.
L.Sáenz
Source: BancayNegocios
