Maximum amount of guaranteed personal deposits must be increased over twofold

ArmInfo. Parliament of Armenia passed amendments to the Law on Household Deposit Compensation in the second and final reading on October 26.

Mikael Melkumyan, MP (Prosperous Armenia Party), says the bill looks to at least double the amount of the guaranteed personal deposits.  The bill was necessitated by the national currency crash in Dec 2014 and the risks and instability that emerged from it for the banking and financial sector. The bill looks to increase the ceiling for the guaranteed deposits in the national currency from 4 million drams to 10 million drams and for the forex deposits - from 2 million drams to 5 million drams (equivalent).  Melkumyan says total amount of the personal deposits with the local banks is nearly 2 trillion drams, and the bill removes the risk for 1.3 trillion drams deposits.  The loan portfolio of the banks is 2.070 trillion drams.  The bill will ensure stable guarantees for the deposits of the dozens of thousands of citizens. The Fund of Guaranteed Deposits will provide funds in case of the bankruptcy of banks.

To recall, during the last months of 2014 the forex market of Armenia registered a sharp rise of the AMD/USD exchange rate - over 570 AMD/1USD. From October through December 17, 2014, AMD depreciated by almost 45% in the retail forex market of Armenia, then it appreciated by 25% on Dec 18-20, staring depreciating against on Dec 22.  On Dec 27, the average AMD/USD exchange rate was 470 AMD/$1, the AMD/EUR exchange rate was 574 AMD/1EUR, the AMD/RUR exchange rate was 8.7 AMD/1RUR.  Over 2014, NASDAQ OMX Armenia registered transactions worth a total of $744.5 mln, with the biggest amount falling on November ($117 mln). Over the year the exchange rate on NASDAQ OMX Armenia rose from 407.14 to 560 AMD/$1 (on Dec 17 the exchange rate rose by 22%), dropping to 470 AMD/$1 by Dec 27.