$290 Million to be Returned to Salvadoran Banking

Banks in El Salvador will receive $290 million that where frozen as a liquidity reserve.

Monday, March 30, 2009

The Salvadoran Central Reserve Bank (BCR) had implemented a liquidity reserve of 3% of all deposits as protection against capital flight during the last presidential election.

According to what Daniel Choto wrote in elsalvador.com, the BCR will begin returning the money gradually, freeing $58 million every fourteen days, in 5 installments.

According to the report, these funds will improve the liquidity of the system: "The banking system will have more resources to approve loans to its customers and improve the liquidity of the system in general."

More on this topic

Banking Legal Reserve Requirements Reduced in Nicaragua

February 2011

The Central Bank announced that the daily legal reserve requirement will now be 12%, while it now stands at 16.25% weekly.

According to Antenor Rosales, president of the Bank, financial institutions must maintain a minimum reserve of 15% biweekly and a daily minimum reserve of 12%.

Costa Rica: Changes in the Banking Reserves Will Restrict Credit

June 2009

According to Banks, the change in the calculation of the reserve will increase the costs of the financial intermediaries and will reduce the supply of credit.

The Central Bank of Costa Rica modified the methodology used to calculate reserves, implicating that, beginning next July 1st, Banks must have deposited in the Central Bank, at the end of each day, deposits of no less than 97.5% of the minimum legal reserves for the previous month. At the moment this calculation is done based on deposits from 5 days beforehand and it is at 90%.

$145 Million Freed to Banks in El Salvador

April 2009

With the backing of the Financial System Superintendent, the Central Reserve Bank began to release half of the additional reserve of $290 million.

Due to the celebration of the recent presidential elections, an additional reserve of 3% had been established, with the anticipation of money withdrawals and capital flight.

Salvadoran Banks Request Release of $261 million

March 2009

The Salvadoran Bank Association will request the SSF to release the $261 million imposed due to the elections.

In late 2008, the Financial System Superintendent (SSF) ordered a 3% increase in liquidity reserves which were at 25% for the protection of deposits if there was a bank run. This increase represented $261 million for the banks which will request for the money to be released as soon as possible.

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