lv
Created on 19.01.2012

 

Taking into account the fact that inflation is on a declining trend and it is possible to make the resources of the financial sector available to businesses more quickly, the Bank of Latvia Council today resolved to reduce the reserve ratio by one percentage point – for bank liabilities above two years from 3% to 2% and for other liabilities included in the reserve base from 5% to 4%. The interest rates set by the Bank of Latvia remain unchanged.

By reducing the reserve ratio, additional financial resources are released for lending and more beneficial conditions for the availability of lending resources necessary for economic growth are created. A simultaneous reduction of the reserve requirement for liabilities of different maturities will promote a balanced impact on the availability of financing in the banking sector and will continue to maintain banks' motivation in attracting long-term financing.

The Report of the Governor of the Bank of Latvia, Ilmārs Rimšēvičs, at today’s press conference will be available in the news section of the Bank of Latvia’s home page www.bank.lv . 

The interest rates set by the Bank of Latvia are as follows:

 

In effect as of

% per annum

Bank of Latvia refinancing rate 

24.03.2010.

3.5

Bank of Latvia marginal lending facility rate to banks that have used the facility no more than 5 working days within the previous 30 day period

09.12.2008.

7.5

Bank of Latvia marginal lending facility rate to banks that have used the facility no more than 10 working days within the previous 30 day period

09.12.2008.

15.0

Bank of Latvia marginal lending facility rate to banks that have used the facility more than 10 working days within the previous 30 day period

09.12.2008.

30.0

Bank of Latvia overnight deposit facility rate

 

24.11.2010.

0.25

Bank of Latvia 7-day deposit facility rate

24.11.2010.

0.375

 

The minimum reserve ratio is one of the monetary policy instruments of the central bank: the smaller it is, the cheaper it is for banks to attract financial resources and banks' lending ability is thus increased, By reducing the reserve ratio for banks' liabilities above 2 years from 3% to 2% and for all other liabilities included in the reserve base from 5% to 4%, it is estimated that the mandatory reserve requirements will decline by around 153 mln. lats.

The amount of minimum reserve requirements is calculated as a set percentage of deposits attracted by banks and securities issued by banks and is to be held with the Bank of Latvia; the minimum reserves must be maintained as a monthly average. The compliance with the minimum reserve requirements is assessed within the maintenance period from the 24th day of the month to the 23rd day of the next month.