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The BCRA Creates Mechanisms to Promote Capital Market Development

Now, Financial institutions may also opt for satisfying their minimum reserve requirements with Treasury Bonds up to the portion they hold in LELIQ bills. This measure is aimed at promoting the development of domestic capital markets.

The resolution adopted by the Board of the BCRA, in line with international practices, seeks to create a liquid and deep market for sovereign bonds, thus ensuring the smooth functioning of the capital market. At present, financial institutions may draw on deposits in current accounts, LELIQ bills, and BONTE 2022 bonds to comply with the minimum liquidity requirements as established by the BCRA for prudential purposes.

The Board of the BCRA established today that National Treasury Bonds in pesos with a minimum term of 180 days may also be allocated to satisfy the portion of minimum reserve requirement that has been complied with LELIQs so far. Thus, financial institutions are free to decide on exercising this option that diversifies their asset portfolio.

At present, the yield of LELIQs is 38% APR, with monthly renewal. The measure will allow financial institutions to subscribe sovereign bonds in the primary market with a portion of their stock of LELIQs for complying with their minimum cash requirements.

The BCRA has created a mechanism whereby banks may sell to the BCRA, if required, the bonds they have already bought to satisfy their minimum reserve requirements. This measure is intended to make minimum reserve requirements liquid at all times.

May 27, 2021.

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