Bank reserves will purchase bonds

Image: Expreso

That money that financial institutions must compulsorily deliver to the Central Bank of Ecuador (BCE for its Spanish acronym), called reserve, and legally equivalent to a portion of the deposits collected, is there to ensure that minimum liquidity required by the economy. But although this is a reserve administered by the Central Bank, the owners are the depositors.

The truth is that the BCE typically invests in fixed-income securities or deposits in another bank of first order and thus receive a payment: interests. However, now a new possibility opened up: that money will also be used to buy bonds issued by institutions of the Ecuadorian public sector such as the Ministry of Finance.

Why do they open that window?”It has been complicated for the Government _ _ to find financing, given the difficult economic situation and the high risk. So, what they’re doing -and will continue to do next year- is to see how even little by little, they get more resources,” told to Daily Expreso Francisco Briones, senior analyst at the Strategic Intelligence consulting firm.

Translated into English by Pierina Abad
Source: http://expreso.ec/expreso/plantillas/nota.aspx?idart=8723322&idcat=38269&tipo=2