December 21, 2018 / 5:57 PM / 4 months ago

Argentina central bank reduces minimum cash reserve requirement for banks

BUENOS AIRES, Dec 21 (Reuters) - Argentina’s central bank has cut reserve requirements for longer-term deposits in a bid to stimulate savings and reduce flight to safe-haven U.S. dollars, according to a statement issued by the monetary authority late on Thursday.

The central bank will not alter the monetary base as part of the new policy.

“The reduction in reserve requirements for certificates of deposit would allow banks to offer higher rates on CDs,” said Gabriel Zelpo, chief economist at local consultancy Elypsis.

The central bank is aiming to encourage deposits in the local currency as the country nears the end of a year that saw a run on the peso spurred by factors including an unexpected recession and higher U.S. interest rates.

The central bank’s modification was praised by the International Monetary Fund, which this year agreed a $56.3 billion standby financing deal with Argentina.

“The central bank’s proposed changes are consistent with the current monetary policy framework and do not alter the announced monetary base targets, while making the current system more transparent, simpler, and efficient,” an IMF spokesperson said.

Reporting by Gabriel Burin and Cassandra Garrison; writing by Cassandra Garrison, Editing by Rosalba O'Brien

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