At an enlarged meeting, the National Bank announced its decision to impose higher coefficients on banks’ reserves if their average interest rates on new overnight deposits exceed 35% per annum. Higher coefficients mean that banks’ costs to service such deposits will increase, the National Bank therefore anticipates that banks might reduce their interest rates on deposits. The competition among banks for people’s resources would decline to the benefit of state banks, since they can set the upper limit for deposits and reduce people’s desire to seek a better offer. In May, the National Bank is expected to reduce interest rates on overnight loans to improve business’ accessibility to credit resources. If interest rates for the population fall below 25% per annum they may react with a sharp withdrawal of Belarusian roubles from the banking system.
