|Mandatory reserve increased to 14.25 percent|
|Monday, 4 February 2013 10:19|
WILLEMSTAD — The Central Bank of Curaçao and St. Maarten (CBCS) continued its policy on mandatory reserve in December 2012. The percentage of the mandatory reserve, the most important instrument, was increased with 0.50 percent point to 14.25, according to the latest Abridged Balance from the CBCS.The instrument is meant to influence the liquid assets of the commercial banks and with that the growth of granting of credits. As a result of increasing the percentage the amount of the mandatory reserves increased with 27.5 million guilders. The outstanding amount remained the same with the CBCS focusing only on refinancing expired Certificates of Deposit (CD’s) during the bi-weekly auctions.
Circulation of currency increased
The amount of banknotes and coins in circulation and the credits on current accounts from the commercial banks with the CBCS, increased in December 2010 with 27.4 million guilders. The increase is due to more banknotes and coins in circulation (31.8 million guilders) compared to a decrease of the credits on current accounts from the commercial banks (4.4 million). The banknotes and coins in circulation increased due to a higher demand for money by the public during the holidays. The decrease in the credits on current accounts from the commercial banks was due to the increase in the mandatory reserves. Furthermore, the temporary credits granted by the CBCS to the commercial banks were repaid almost entirely – as seen on the balance in the entry ‘Debts from banks’ (52.4 million guilders). To finance the net purchase of banknotes and coins, the higher mandatory reserve and the repayment of the temporary credits the banks sold foreign currency on balance to the CBCS. This explains the increase with 117.8 million guilders in the entry ‘Foreign currency’ on the assets side of the balance. The entry ‘Gold’ on the assets side of the balance decreased with 46.7 million guilders owing to the lower market value on the balance date compared to the end of November 2012. The decrease in the entry ‘Capital and reserves’ on the liabilities side of the balance is related to this.