This is a new regulatory framework that promotes the management of short-term liquidity through Treasury securities, replacing remunerated liabilities of the BCRA.
In the run-up to the Treasury tender, the Directory of the Central Bank (BCRA) defined this Thursday a new regulatory framework that promotes short-term liquidity management through Treasury securities, replacing remunerated liabilities of the BCRA.
“This determination contributes to the objective of giving efficiency to the tools necessary for the development of liquidity and domestic credit markets,” explained the monetary authority in a statement.
The regulatory change “is an additional element of the process of recovering control of monetary programming by the BCRA. The progress in reducing the primary creation of money, through the fiscal anchor, has been central in the beginning of a disinflation process “he added.
Complementing this effort, the BCRA said that will continue to reduce other emission sources that adversely affect monetary programming.
In this sense, the Board of Directors established that “the titles that are acquired by primary subscription within the bidding program for Letters at a fixed rate announced by the Ministry of Economy “will not be counted for the purposes of credit fractionation of the public sector, for up to a certain amount for each institution.”
The amount is set in relation to the repo balances of each institution as of May 15, 2024. Leaving behind a scheme in which the BCRA was the main source of remuneration for transactional monetary balances, “The changes underway will contribute to strengthening stability and will provide greater room for the development of private credit.”
The allocation of financial resources through transparent pricing mechanisms “is essential for the normalization of financial intermediation. The systematic reduction in expected inflation anticipated by the consensus of market analysts (through the REM) and that discounted in the prices of instruments in the financial market is evidence of the current convergence to macroeconomic equilibrium.”
The BCRA anticipated that, as a consequence of the greater macroeconomic stability, The recomposition of the demand for the monetary base will be a factor that will contribute to this process of making financial intermediation more efficient. Given the impact of financial innovation on payment methods, it is expected that The monetary base incorporates, in addition to circulation, “digital” money.
Source: Ambito
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