Ecuador uses gold to obtain USD 300 million of liquidity

The Central Bank of Ecuador (ECB) carried out a short-term operation to obtain financing for USD 300 million in exchange for 15 tons of gold from the Central’s reserves .

Ecuador uses gold to obtain USD 300 million of liquidity

The loan is reflected in the ECB’s weekly bulletin , issued on March 20, 2020.

This is a similar mechanism to the one the bank used on December 27, 2019. This line of liquidity facility, which the ECB obtained with one of its international counterparts , consists of temporarily holding the gold immobilized in an account of the ECB abroad and in exchange the agency receives cash resources . The term of the operation is one month.

“This operation is part of proper management in the absence of savings that in these times of crisis would have worked. It serves to cover the liquidity needs of the financial system and therefore of the citizens . It is responsible to have these lines open and we are looking for others, ”said Verónica Artola , manager of the ECB.

The Central Bank did not specify the credit conditions , but Artola indicated that this loan was given in better conditions than that of December last year, due to the fact that the price of gold has improved in the markets , due to the uncertainty generated by the covid-19 and the fall of crude oil .

This loan will help international reserves (RI) improve their position.

The RI, which are the currencies that support the money that circulates in the country, were located on March 20 at USD 2,113 million; This is a drop of 28.7% in relation to the previous week, according to the latest bulletin of the Central Bank of Ecuador (ECB).

Thus, the IRs currently cover 68% of the currency issue and deposits held by private banks with the ECB. In February, coverage closed at 113%.

https://www.elcomercio.com/actualidad/ecuador-reservas-oro-financiamiento-liquidez.html