Brazil's central bank BCB has again reduced reserve requirements in an effort to improve liquidity for small and mid-size banks, BCB said in a statement.
Financial institutions with equity of up to 2.5bn reais (US$1.27bn) can deduct up to 40% of their reserve requirements on time deposits if they take on other banks' loan portfolios, BCB said.
This measure could free up as much as 23.5bn reais for additional credit, local press reported.
President Luiz Inácio Lula da Silva again instructed economic officials to protect growth, saying consumers and businesses should not lack credit, local press said.
Last month, the international financial crisis promted BCB to postpone increasing the reserve requirements on leasing and upped the amount banks can deduct from their reserve requirements on time deposits, savings deposits and demand deposits to 300mn reais from 100mn reais.
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