THE Bank of Jamaica (BOJ) on Monday eased requirements on banks foreign cash reserves and liquid assets as loan receipts from multilateral institutions propped up its gross foreign reserves to above US$2.2 billion.

Last Friday, the central bank in a press statement said effective March 1, 2010, “the cash reserve requirement with respect to foreign currency prescribed liabilities of deposit taking

institutions will be reduced by two percentage points to nine per cent (and) the liquid asset requirement will also be reduced by two percentage points to 23 per cent”.

“The cash reserve and liquid asset requirements applicable to Jamaica dollar liabilities remain unchanged,” added the release.

The BOJ said that the receipt of loan flows in February “has put the BOJ in an enhanced position to maintain stability in the foreign exchange market”.

The central bank expects that its foreign reserves will grow even further by the end of this month.

“The reduction in the requirement will allow deposit taking institutions more latitude in the allocation of their foreign currency portfolios, including expanding credit to the business sector,” said the release. “This adjustment returns the reserve requirements for foreign currency to the level that prevailed prior to December 2008.”

On December 3, 2008, the BOJ had increased the reserve and asset requirements to address what it then described as a “build-up of Jamaica dollar liquidity in the banking system that could threaten stability”.