In response to the local and global economic crisis, the liquidity measures taken in October 2008 were extended by nine months.
In October 2008, the National Council of Financial System Supervision (CONASSIF) decided to relax some of the risk indicators required of financial institutions to strengthen their liquidity.
This relaxation initially ran from October through March, but the Council decided to extend it until December.
With the creation of a Special Assistance Line (Lafex), the Central Bank could rescue domestic financial institutions that are having liquidity problems.
Antenor Rosales told Laprensa.com.ni: "It is one of the efforts of the Government, particularly the Nicaraguan Central Bank, to ensure all measures that guarantee a financial system that has solvency and liquidity.
The Bank does not see a reduction in interest rates, especially in colones, while there is no decrease in inflation.
Marvin Barquero published in the Nacion website: "Given that banks have the resources to lend, the businessmen request to reduce the minimum legal deposit (percentage of public deposits that banks must keep as backup) was virtually ruled out.
Starting today, the basic rate falls 0.5 percentage points, going from 12% to 11.5%.
Pablo Villalobos, who is responsible for the financial and monetary statistics of the Central Bank, informed Nacion.com: "The variation of today [yesterday] is a response to normal situations that are given from one week to another. ...As opposed to last week, this time there was a smaller capturing of resources on the part of banks and other financial companies."
After a raise of 0.75 percentage points, the rate now stands at the same level of mid January, record level since May 2008.
Pablo Villalobos, head of monetary statistics at the Costa Rican Central Bank, explained to Nacion.com: "This is basically due to a larger amount of reception of money by private banks, which charge the highest interest rates. This implied that they weighted more in formula used to calculate the Basic Rate."
The banking system of Honduras registered in January a liquidity of $952 million, $435 million more than that of July 2008.
According to the president of the Central Bank of Honduras, Edwin Araque, this is due to the policies of a gradual reduction in the banking adjustments and the measures to limit the credit for consumption and commerce and to promote the productive sectors.
Banks participating in the program won't benefit from lower rates nor more flexible conditions than those provided by their correspondent banks.
Diego Quijano, in an article published in Prensa.com, writes: "This is because the cost of the funds won't be subsidized and collateral will be required, for the program to be 'sustainable'".
The program is a "mechanism to stimulate credit in the economy, of voluntary, non compulsory use for interested banks" indicated Felipe Chapman, partner at consulting firm Indesa, during a presentation to clients on the probable repercussions of the PEF (Programa Estímulo Financiero - Financial Stimulus Program)".
After in the increase in the growth rate of the ceiling of the exchange band, the reference exchange rate continues to be close to the ceiling.
Nacion.com reports: "The weighted average price (considering the amount traded at each exchange rate) of the wholesale market (Monex) at the end of the day was at 562.28 colones per dollar, very close to the ceiling of the band, which was at ¢563,65 yesterday."
President Martin Torrijos announced that his government will create the fund to help local banks which are having problems accessing international markets for credit.
Dialogociudadano.com reports: "Torrijos said in a discourse that the fund will be established with loans from the Andean Development Corporation (CAF) and the Inter-American Bank (IDB) as well as from the National Bank of Panama, in order to provide help to banks in the country with cash problems, in case it is needed.
The election of former Foreign Minister Milton Jiménez as president of the National Banking and Insurance Committee, following the removal of Gustavo Alfaro, caused unrest in the banking sector.
As published by elfinancierocr.com: "Alfaro was removed after presenting a report on the deposits of honduran banks in foreign entities, which, according the the Central Bank of Honduras, grew in over $200 million in 2008, causing a decrease in financial liquidity and high interest rates".
The Government increased to $530 million the funds that will be used to stimulate sectors such as the construction and maquila industries.
According to Reuters: "In mid December, the Government of President Manual Zelaya said that they would inject 210 million dollars into the state and private banks so that they can provide credit to those sectors, but now they have indicated that the figure will be doubled.
The Central Bank announced that it will temporarily suspend all liquid operation in dollars in the banking system.
Latribuna.hn reports: "The purpose of the measures is to alleviate pressure on the short term markets for financing in US dollars.
This was announced yesterday by the president of the Bank, Edwin Araque, who said that they have reduced the monetary policy rate from 9 to 6.75 points."
Since yesterday financial groups offering loans will be required to have reserves that equal 100% of the expired credits portfolio.
According to prensalibre.com, "In order to achieve this, generic reserves have been established to support current (specific) requests.
Banks should have reserves representing a percentage based on the last accrued months of portfolio, which range from 5% for a 30-day accrual and up to three month, and 100% for more than a year."
The monetary board decided yesterday to keep the main interest rate at 7.25%, despite the request from the business sector to lower it in order to revive the economy.
How many houses are not being built and how many business projects have been stopped due to the lack of credit or the increase in interest rates? And, how many potential jobs have been lost as a result?
Tomorrow the Superintendence of Banks (SIB) will request that the Monetary Board approve a modification of the Regulations for Credit Risk Management.
Even though bank portfolios in arrears are not at a critical level, the SIB will request that the Monetary Board make the changes to the rules in order for banks to increase their reserves for bad debts (loans).