Monday, June 10 2019 19:46

ArmInfo.The Central Bank of Armenia, with the aim of strengthening financial stability and ensuring the prerequisites for creating foreign exchange liquidity buffers, made changes to Regulation No. 2 "Regulation of Banking Activities, Basic Economic Standards of Banking Activities". In particular, changes have been made to paragraphs 50 and 51 of this provision, concerning mandatory reserves for funds raised.

The decision on this was made by the CB Board on June 7, 2019. This decision comes into force on the day after publication on the official website of the Central Bank of Armenia (the publication on the website of the Central Bank is dated June 7, 2019). At the same time, the provisions established by this decision relate to actual periods starting from June 12, 2019, which are the basis for the last reporting periods. In particular, clause 50 of the No. 2 provision in the new edition states: Reservation at the Central Bank is subject to funds attracted by banks (including branches of foreign banks operating in Armenia) of dram, currency and metal accounts. So, the obligatory reservation for the attracted dram funds is carried out in drams (minimum size 2%); on attracted dollar funds - 16% is reserved in drams, and 2% - in dollars; on attracted euro funds - 16% is reserved in drams, and 2% - in euros; and for funds attracted in other foreign currencies, as well as for impersonal metal accounts - 16% is reserved in drams, and 2% - in dollars.

Moreover, for funds raised, falling under paragraphs 24.1.3 and 24.1.4 of Regulation No. 2, the mandatory reservation is fully made in AMD, except for the funds attracted by banks on their own issued bonds, for which the mandatory reservation is zero. In this decision, it is noted that the mandatory reservation for the funds raised is carried out in the terms established by paragraph 52 of this provision. For funds attracted in foreign currency, the first actual reservation period is the period from June 12, 2019 to July 9, 2019. The risk associated with a change in the exchange rate is borne by the bank. Paragraph 51 of the No. 2 clause in the new edition states: Regulation of the amount to be reserved in drams for borrowed dram and foreign currency funds (including metal accounts) is made by comparing the average daily amounts of actually reserved and reservable funds so that The reserved average daily amount would be equal to or exceed the average daily amount to be reserved in the reporting period.

Regulation of the amount to be reserved in the relevant currency for funds attracted in foreign currency (including metal accounts) is made daily so that during the actual reservation period the amount reserved every day would be equal to or greater than the average daily amount to be reserved during the reporting period funds. For funds attracted in foreign currency (including metal accounts), the amount to be reserved in AMD per day is determined on the basis of the daily dram equivalent of funds attracted in foreign currency. The daily AMD equivalent for each day is determined on the basis of the average rate of the Armenian Dram against this currency, which was formed on the foreign exchange market announced by the Central Bank on this day. And on metal accounts, the daily dram equivalent for each day is determined on the basis of the estimated gold prices announced by the Central Bank on that day. The compulsory reservation for funds attracted in other foreign currencies (except the dollar and the euro) is calculated at the cross-rate based on the average Armenian Dram exchange rate for this currency on the basis of the Central Bank announced this day.

The compulsory reservation made in foreign currency by means attracted from metal accounts is made on the basis of the estimated gold prices announced by the Central Bank for this day, as well as on the basis of the average Armenian Dram exchange rate for this currency announced by the Central Bank for this day.