BCRA Takes Measures to Improve Market Performance

Buenos Aires, June 18th, 2018. The Board of the BCRA has approved four measures that are effective as of today.

First. Minimum reserve requirements will gradually increase by 5 percentage points for demand and term deposits; however, there are certain exceptions. The measure is expected to absorb liquidity to the tune of AR$100 billion from the financial system, taking into account that each minimum cash requirement point in pesos represents approximately AR$20 billion. The increase in the requirement will take place on June 21st, 2018 (3 percentage points) and on July 18th, 2018 (2 additional percentage points).

Minimum cash requirements may be met in full either in pesos or by means of National Treasury Bonds in pesos at a fixed rate maturing in November 2020 and valued at market price. Such instruments will be issued with a settlement date on June 21st, 2018.

Second. The limit of positive foreign currency net global position calculated in daily stocks is reduced from 10% to 5% of the institution’s regulatory capital.

Third. With the aim of invigorating the secondary market of National Treasury Bills in Foreign Currency (Letes in US Dollars):

a. the requirements for financial institutions to purchase Letes in US Dollars in the secondary market are relaxed;
b. financial institutions are authorized to increase their foreign currency net global position above the 5% allowed and up to 30% of their regulatory capital, as long as such excess is complied with by means of Letes in US Dollars.

Fourth. It is now possible to carry out spot foreign exchange purchases and/or sales through tender as described below. This new mechanism is to be implemented in cases where there is a clear dysfunction in terms of price differential (purchase/sale), volume or volatility:

a. The official call for tenders will be announced by the BCRA through the SIOPEL platform of the Mercado Abierto Electrónico with at least 30 minutes in advance.
b. Each auction will remain open for 15 minutes.
c. The total amount of the tender will be established by the BCRA on a case by case basis.
d. Bidders can place up to three bids, with a minimum amount of US$1 million each and in US$1 million increments.
e. The price or amount of bids cannot be altered once entered into the SIOPEL platform.
f. The price for each US Dollar received shall be expressed in Argentine Pesos with up to three decimal places.
g. The amount of US Dollars that the BCRA decides to place in each bid shall be awarded by price, from highest to lowest, until the desired amount is reached.
h. Bids will be awarded at the price they have been offered.
i. The bids with the lowest price admitted may be subject to apportionment.

June 18th, 2018