Ecuador
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Central bank obliges banks to repatriate money

Bnamericas Published: Monday, June 01, 2009
Ecuador's central bank has introduced a new rule obliging banks to repatriate some of the money they have invested overseas, President Rafael Correa said during the weekend. The rule, called "coefficient of domestic liquidity," states that financial institutions have to invest 45% of their reserves in the domestic market. The new rule from the central bank comes to complement a recently approved rule that states that 25% of banks' assets have to be invested in highly liquid instruments, local independent consultant Alejandro Sarzosa told BNamericas. "The party is over for bankers, they can't hold US$4bn overseas anymore. They will have to repatriate some US$1.2bn," Correa said on Saturday. The head of state also dismissed arguments that banks' money is safer abroad, given the ongoing international crisis, local paper Expreso reported. The Ecuadorian government has adopted a confrontational stance towards banks in the last few weeks, and has called on them to reactivate lending.

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