The Bank of Jamaica, BOJ, will be reducing the cash reserves that deposit-taking institutions are required to hold against their prescribed liabilities by three percentage points to nine per cent, effective March 1.
The move is being made as part of the effort to improve the institutions’ ability to provide more credit to households and businesses at lower rates and on better terms.
That reduction will result in the release of $16.8 billion to deposit-taking institutions and, according to central bank Governor Brian Wynter: “Bank of Jamaica intends to make further reductions in the cash reserve requirements over the course of the year, based on assessments of market conditions.”
The liquid assets requirement is also being reduced by the same amount, but no changes will be made to the cash reserve and liquid assets requirements for prescribed liabilities denominated in foreign currencies.
On Wednesday, the BOJ lowered the policy interest rate – the rate offered on overnight placements with the central bank – by 25 basis points to 1.50 per cent.
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