The Central Bank of Cyprus has relaxed the minimum liquidity reserve requirement in foreign currencies for commercial banks operating in Cyprus. A directive issued in August reduces the reserve requirement in foreign currencies from 75% of total foreign deposits to 70%. The minimum liquidity reserve requirement in euro is unchanged at 20%.
The change in reserve requirements will allow commercial banks to lend the equivalent of up to 30% of their total foreign currency deposits compared to 25% before the change, and is expected to release around €550 millions of additional liquidity into the market.
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