BANCO CENTRAL DE LA REPUBLICA ARGENTINA

COMUNICACION "A" 3195 I 07/12/00

TO FINANCIAL ENTITIES:

Ref.: Circular LISOL 1 - 322
Minimum Liquidity Requirements. Increase in Minimum Daily Requirement

We address you to inform you that this Institution has adopted, on the subject referenced, the following resolution:

“1. Substitute, with effect from 02.01.2001, point 2.2. of Section 2. of the rules on “Minimum Liquidity Requirements”, with the following:

2.2. Calculation.

Compliance with the integration of minimum liquidity requirements will be measured based on the monthly average of daily balances of the concepts admitted for such effect, registered during the same month to which the requirements correspond, dividing the sum of said balances by the total number of days in the period. On days where no movement is registered, the balance corresponding to the immediately preceding business day must be repeated.

On no day of the month shall the sum of the balances of the admitted concepts, registered at the close of each day, be less than 75% of the total requirement determined for the immediately preceding month to which it corresponds, without considering the effects of the application of what is provided in point 1.7.1. of Section 1.

Such daily requirement shall be 80% when in the previous calculation period a deficiency in integration in monthly average greater than the admitted margin has been registered.”

We send you attached the foundations of the measure and the sheets that, in replacement of those previously provided, correspond to be incorporated into the ordered text of the reference.

We salute you very attentively.

BANCO CENTRAL DE LA REPUBLICA ARGENTINA

José Rutman
Principal Manager of Standards

Alejandro Henke
General Sub-manager of Regulation and Information Regime

ANNEX: 3 sheets

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B.C.R.A.
FOUNDATIONS OF THE RESOLUTION ON MINIMUM LIQUIDITY REQUIREMENTS. INCREASE IN MINIMUM DAILY REQUIREMENT

Annex
to
Com. "A" 3195

1. Minimum liquidity requirements constitute a reserve of financial entities, to meet in a timely and proper manner their commitments, especially in critical situations of systemic liquidity.

In pursuit of that objective, the rules on “Minimum Liquidity Requirements” establish that on no day of the month shall the integration of those requirements be less than 60% of the total requirement determined in the immediately preceding month to which it corresponds. Such daily requirement is raised to 80% when, in said calculation period, a deficiency in integration in monthly average greater than the admitted margin has been registered.

The objectives of said requirement are to smooth the effects on the market interest rate linked to the intra-month seasonality of money demand and to guarantee a stable level of systemic liquidity as well as the international reserves of the financial system.

2. Furthermore, in recent years and as a consequence of a greater “banking” of the population, a relative reduction in the demand for money with respect to the different monetary aggregates has been observed. This led to a decrease in the impact on financial entities of the intra-month seasonality of money demand.

Additionally, the greater fluidity in the supply of monetary resources by financial entities has led to a reduction in the increases in interest rates for seasonal reasons linked to compliance with minimum liquidity requirements.

The situation described above is clearly reflected in the behavior observed in financial entities when carrying out the minimum daily integration of minimum liquidity requirements.

In this context, with the objective of contributing to achieving a more homogeneous integration throughout the month and, consequently, giving greater stability to the liquidity of the financial system, it is considered convenient to define a policy tending to have the daily integration maintain a greater relationship with the monthly integration, to gradually converge to a value around 90%.

In that sense, in a first stage, the minimum daily integration is raised, starting from January 2001, to 75% of the average requirement of the immediately preceding month.

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MINIMUM LIQUIDITY REQUIREMENTS B.C.R.A. Section 2. Integration.

2.2. Calculation.

Compliance with the integration of minimum liquidity requirements will be measured based on the monthly average of daily balances of the concepts admitted for such effect, registered during the same month to which the requirements correspond, dividing the sum of said balances by the total number of days in the period. On days where no movement is registered, the balance corresponding to the immediately preceding business day must be repeated.

On no day of the month shall the sum of the balances of the admitted concepts, registered at the close of each day, be less than 75% of the total requirement determined for the immediately preceding month to which it corresponds, without considering the effects of the application of what is provided in point 1.7.1. of Section 1.

Such daily requirement shall be 80% when in the previous calculation period a deficiency in integration in monthly average greater than the admitted margin has been registered.

2.3. Maximum calculation limits.

The integration in the admitted concepts will only be computable up to the following maximum limits, measured with respect to the minimum requirement of each period:

Concept	Maximum computable -in %-
i) Points 2.1.1. and 2.1.2. (together)	100
ii) Point 2.1.3.	20
iii) Points 2.1.4. to 2.1.12. (together)	80
a) Points 2.1.9. and 2.1.10. (within the 80% margin)	30
b) Point 2.1.11. (within the 80% margin)	10
c) Point 2.1.12. (within the 80% margin)	5

Version: 5th Communication “A” 3195Validity: 02.01.01

ORDERED TEXT ORIGIN NORM

Section	Point	Paragraph	Com.	Annex	Point	Paragraph	Observations
1.	1.4.1.4.		“A”	3126
1.	1.4.2.		“A”	2422	único	2.	2º According to Com. “A” 2511. Modifies applicable criterion.
1.	1.4.3.		“A”	2422	único	2.	4º and 5º According to Com. “A” 2648. Modifies applicable criterion.
1.	1.5.		“A”	2422	único	2.	last According to Com. “A” 2569. Includes interpretative clarification.
1.	1.6.	1º	“A”	2494	5.1.1.	1º	According to Com. “A” 2653. Modified by Com. “A” 2886 and “A” 2931.
1.	1.6.	2º	“A”	2494	5.1.	last	According to Com. “A” 2653.
1.	1.6.	last	“A”	2494	5.3.
1.	1.7.		“A”	2833	1.		Includes clarification.
2.	2.1.1.		“A”	2422	único	3.1.1.	According to Com. “A” 2663.
2.	2.1.1.1.		“A”	2380	3.
2.	2.1.1.2.		“B”	6374
2.	2.1.1.2.		“B”	6378
2.	2.1.2.		“A”	2422	único	3.1.4.	According to Com. “A” 2663.
2.	2.1.3.		“A”	2817	2.		According to Com. “A” 3112
2.	2.1.4.		“A”	2422	único	3.1.12.	According to Com. “A” 2705.
2.	2.1.4.		“A”	2695
2.	2.1.4.		“B”	6324
2.	2.1.4.		“B”	6342
2.	2.1.5.		“A”	2422	único	3.1.2.	According to Com. “A” 2663.
2.	2.1.6.		“A”	2422	único	3.1.10.	According to Com. “A” 2648.
2.	2.1.7.		“A”	2422	único	3.1.3.	According to Com. “A” 2663.
2.	2.1.8.		“A”	2422	único	3.1.8.	According to Com. “A” 2648.
2.	2.1.9.		“A”	2422	único	3.1.11.	According to Com. “A” 2648 and 2705.
2.	2.1.10.		“A”	2422	único	3.1.9.	According to Com. “A” 2648.
2.	2.1.11.		“A”	2422	único	3.1.5.	According to Com. “A” 2663 and 2648.
2.	2.1.12.		“A”	2422	único	3.1.7.	According to Com. “A” 2648.
2.	2.2.		“A”	2422	único	3.	1º and 2º According to Com. “A” 2663, 2833, 2915 and 3195.
2.	2.3.		“A”	2422	único	3.2.	According to Com. “A” 2705. except ii) “A” 2817 3.
2.	2.4.		“A”	2610	I	I.1.	3º
3.	3.1.1.		“A”	2422	único	5.	According to Com. “A” 2490, modified by Com. “A” 2833 and 2915.
3.	3.1.2.		“A”	2422	único	5.	According to Com. “A” 2490.
3.	3.1.3.		“A”	2422	único	5.	According to Com. “A” 2490 and “A” 3100.
3.	3.1.4.		“A”	2422	único	5.	According to Com. “A” 2490.
3.	3.1.4.		“B”	5159
3.	3.2.		“A”	2895			According to Com. “A” 2991.
3.	3.3.		“A”	2833	2.		According to Com. “A” 2895.
4.	4.1.						Explicits criterion.