The National Bank of Serbia made a decision to increase the mandatory reserve rates, as a measure to fight inflation, the central bank announced.
As it is stated, the Executive Board of the National Bank of Serbia at today’s meeting decided to increase the foreign currency reserve requirement rates by three percentage points to 23 percent and 16 percent for obligations with contractual maturities of up to two years and over two years, respectively.
The percentages of the dinar allocation of foreign exchange reserve requirements were also increased by eight percentage points to 46 percent and 38 percent for obligations with contractual maturities of up to two years and over two years, respectively.
Finally, the dinar-based reserve requirement rates were increased by two percentage points to seven percent and two percent for obligations with contractual maturities of up to two years and over two years, respectively.
As stated, the reserve requirement is a common instrument of monetary policy that is available to the central bank to regulate liquidity, and thus influence the monetary conditions of the banking sector.
The aforementioned changes are aimed at supporting the current tightening of monetary conditions in the environment of an extremely high surplus of dinar liquidity in the banking sector by raising the basic interest rates of the National Bank of Serbia, which further increases the efficiency of the transmission mechanism of monetary policy and contributes to the return of inflation to the target limits.
The total estimated effect of this measure at the level of the banking system is the withdrawal of dinar liquidity in the amount of about EUR 980 million, while the effect on foreign currency liquidity would be almost neutral (withdrawal of about 25 million euros).