The Baltic Times

Lithuania slashes required reserves

  • 2008-11-06
  • TBT Staff in cooperation with BNS
VILNIUS - The Bank of Lithuania has slashed the required reserve levels of banks from 6 percent to 4 percent.

The move is expected to release approximately 1 billion litas (290 million euros) of additional funds into the market.

"We are satisfied with the current situation in the crediting market, but this decision will perhaps help to make crediting somewhat more active and will provide some kind of support to commercial banks," Reinoldijus Sarkinas, the chairman of the Bank of Lithuania's board, told BNS.

"I could not say that because of this decision alone banks will cut interest rates on loans, but this would be a step into this direction as well," he said.

The central bank's board took the decision to reduce the required reserves ratio on Thursday. "In view of the economic slowdown in the country, the Bank of Lithuaniais releasing a part of banking resources and creating more flexible liquidity management conditions for banks," the central bank said in a press release.

The required reserves ratio will have to be reduced to 2 percent by the time Lithuaniain order for the country to adopt the euro.

The last time the Bank of Lithuaniacut the ratio was in March 2002, to 6 percent from 8 percent.


 

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