As announced on September 26 during the presentation of the new monetary policy scheme, the BCRA continues with the strategy aimed at reducing the LEBAC bill stock. At present, the stock of LEBAC bills amounts to ARS340 billion. Out of this amount, 12% is held by banking institutions and the rest is in the hands of non-banking institutions such as mutual funds, companies, individuals and non-residents.
As reported in due time, once this process is over, the instruments issued by the BCRA will solely be held by the banks in the domestic financial system. This will improve the effectiveness of monetary policy, encourage the development of the financial system and strengthen our economy.
The measures to be implemented are the following:
1. In the upcoming auction to take place on October 16, 2018, the BCRA will offer between ARS100 billion and ARS150 billion in LEBACs to be subscribed by non-bank participants, against an estimated maturity of ARS231 billion held by the same participants.
2. Once again, financial institutions will only make bids in LEBAC bills primary auctions on behalf and to the order of non-bank third parties.
3. As for financial institutions, the BCRA will issue liquidity bills (LELIQs) that will continue consolidating as the BCRA’s main channel of sterilization.
4. At the same time, the Ministry of Economy will offer Treasury Bills that will serve as an alternative investment in pesos for all participants.
5. With a view to ensuring a smooth process for removing the LEBAC stock, the BCRA announced a timely 3-point increase of minimum reserve requirements for the largest institutions as from October 1. The portion of the requirements so increased may be complied with in LEBAC bills and NOBAC notes.
