Tashkent, Uzbekistan (UzDaily.com) -- At the meeting on 13 June 2024, the Board of the Central Bank decided to reduce the reserve requirement ratio on foreign currency deposits to 14 percent.

Based on the liquidity situation of the banks, the required reserve ratio for deposits in foreign currency was lowered by 4 percentage points to 14 percent in order to create conditions for reducing the interest rates on bank loans.

In 2021, the required reserve ratio on foreign currency deposits was raised to 18 percent with the aim of reducing deposit dollarization. As a result, the dollarization in deposits decreased from 40 percent at the beginning of 2021 to 30 percent as of 1 June 2024, while the dollarization in bank loans decreased from 47 percent to 42 percent.

The lowering of reserve requirements on foreign currency deposits allows banks to relieve some pressure on interest expenditures.

Moreover, based on the current liquidity situation, in order to ensure the continuity of payments, it was decided to increase the averaging ratio from 80 percent to 100 percent and return 3.0 trillion soums of funds currently available in the required reserve accounts to commercial banks.

These changes will take effect from July 2024.

In the medium term, measures will be taken to further improve reserve requirements for foreign currency liabilities, including a gradual expansion of the required reserve base in 2025-2030 and a corresponding reduction in the required ratios.