Ulaanbaatar
Reserve requirements of banks reduced
Economy
Ulaanbaatar /MONTSAME/ Reserve requirements of banks have been reduced. In this regard, banks are obliged to place 12 percent of USD deposit and 10 percent of MNT deposit to the Bank of Mongolia in cash.
The reserve requirement for MNT deposit reduced from 12 to 10 percent. The decision was made to maintain financial stabilty.
Higher reserve requirement for USD deposits is also a risk-prevention approach. The relative stabilization of dollar rate has prompted citizens and enterprises to get a dollar loan. Tugrug is expected to stay strong in short-terms, however the rates could change in 4-5 years. Therefore, it is important to encourage banks to attract more MNT deposits than USD deposits.
Reserve requirements are used to keep the banking system healthy and risk free. Whenever a bank becomes insolvent, payments are made from the reserve requirements.
The reserve requirement for MNT deposit reduced from 12 to 10 percent. The decision was made to maintain financial stabilty.
Higher reserve requirement for USD deposits is also a risk-prevention approach. The relative stabilization of dollar rate has prompted citizens and enterprises to get a dollar loan. Tugrug is expected to stay strong in short-terms, however the rates could change in 4-5 years. Therefore, it is important to encourage banks to attract more MNT deposits than USD deposits.
Reserve requirements are used to keep the banking system healthy and risk free. Whenever a bank becomes insolvent, payments are made from the reserve requirements.
B.Misheel
