CBI reduces the reserve requirement for banks to 15%

[ronscarpa]

CBI reduces the reserve requirement for banks to 15%

Reuters - 25 August 2010

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Official said Iraq's central bank said on Tuesday that the bank decided to cut the reserve requirement for commercial banks to 15 percent from 20 percent in a move aimed at encouraging lending.

The harmful Qasim Bank senior adviser said the decision aims to encourage investment in Iraq, where economic development has slowed despite the dramatic decline in violence which erupted after US-led invasion in 2003.

Kassem said in an e-mail, "the Iraqi Central Bank reduced the reserve requirement for banks to 15 percent from 20 percent as of September 2010."

Core inflation has slowed in Iraq - ie, excluding spending on fuel, as defined by the Central Bank of Iraq - to 2.7 percent in June from three percent in May

.

The bank also cut key interest rates by 100 basis points to six percent in April as a result of low inflation.

Qasim told Reuters: "indicators of inflation started to fall ... so follow the CBI policy is less stringent in the direction of providing liquidity to banks."

This is the second time the bank cut the reserve ratio requirement for banks this year after it was reduced from 25 percent to 20 percent in April.

The Iraqi economy is still largely isolated from the global financial system heavily dependent on oil, as Iraq has the third largest oil reserves in the world.

And the ability of the private sector access to credit is limited and highly regarded investment outside the oil sector, which dominates the economy is vital to rebuild the country after decades of war, sanctions and the economic downturn.

[woookiee]

Thanks for the post.

[frankc]

Thanks very much for the post.

frankc

[Trimark]

And the good news just keeps on coming! Thanks for the post Ron.