When bank liquidity decreases

The initial alarm signal is when a bank has no liquidity and begins to offer its savers, especially newcomers, interest rates that are far above those offered by other banks.

Wednesday, August 6, 2008

They also turn to borrowing from other commercial banks and the Central Bank. During the Great Depression (1929-1933), banks in the United States and in Guatemala had liquidity problems. Curiously, though, the Central Bank of Guatemala and the Credito Hipotecario Nacional (National Mortgage Bank) reported reduced profits during those years, although they did not end up in the red.

More on this topic

Guatemalan banks ask for more liquidity

November 2008

The local banking system started to feel the effects of the international financial crisis with credit restrictions in place from international correspondent banks.

Some entities have already lost this option, while others that have managed to borrow money have found that the price has increased.

Guatemala: Interest Rates Lowered

February 2014

The reduction in interest rates generated by increased liquidity in the market lowers the cost of financing for the private sector.

Representatives from the banking sector in Guatemala assert that the reduction in interest rates generated by the increased liquidity in the market, lowers the cost of financing for the private sector.

IDB approves $500 million for Costa Rica

December 2008

The funds will be used to deal with the possible lack of liquidity next year due to the international financial crisis.

"This loan will inject Zuniga, who also added that with the funds from the IDB the authorities are seeking to provide "sustainable growth" for the Costa Rican economy.

Guatemalan Government injects $275 million.

November 2008

The Monetary Board in charge of directing macroeconomic policies of the country opened a special account in US dollars and placed it at the disposal of the private banks to help them acquire liquidity.

Maria Antonieta Bonilla explained that the account would come into effect as of 31st Jan, 09 with the objective of giving liquidity to banks in the system that have had some difficulties.

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