SANTO DOMINGO.– The Dominican Republic's Multiple Banking Association (ABA) stated yesterday that monetary stimulus measures are fulfilling their objective in financing productive sectors and households, "an aspect in which the banking sector has acted in accordance with the provisions of the monetary authorities, the demand of the financial market and the requirements of users."
He explained that the recent measures are expected to initiate a gradual process of reducing active interest rates, with a positive effect across all sectors of the economy.
"Due to the impact of the measures, it is anticipated that this time the transmission channel will be achieved more quickly than on previous occasions, in order to reduce the cost of money," he added.
The active interest rate refers to the percentage that a financial institution charges businesses or individuals on outstanding balances from financing received (credit cards, loans, etc.). In other words, it refers to the payment that borrowers must make to the bank for the use of the money.
The ABA recalled that the recent measures taken by the Central Bank to accompany the reduction of the monetary policy rate with "strong liquidity stimuli" of 119 billion pesos, made available from June 18, seek to revitalize the economy, "after successfully achieving the return of inflation to the target range of 4 ± 1% in less time than expected.".
In a press release, the banking association reported that 59 billion pesos remain to be placed, out of a total of 119 billion pesos allocated to financing for households and productive sectors with rates not exceeding 9.0% annually, which will be disbursed as there is demand for credit for the purposes for which they were granted.
These resources correspond to 34 billion pesos that were released from the legal reserve and an additional 25 billion pesos from rapid liquidity facilities (FLR).
Regarding the 60 billion pesos placed by the Central Bank through rapid liquidity facilities, he explained that, of these funds, 30 billion pesos were exclusively intended for the liquidity management of multiple banks in order to accelerate the reduction of interest rates.
The union specified that of the remaining 30 billion pesos, "as the regulatory body itself explained," 62% was channeled by financial intermediation entities to the trade and MSME (micro, small and medium-sized enterprises) sector, followed by 16% for the manufacturing sector and 15% for the construction sector.
He indicated that the resources were not granted to consolidate or reduce existing debts but for new loans that boost sales and the links in consumption and production, as has been done by the banking sector.
