Yerevan/Mediamax/. This year the Central Bank (CB) will take up a number of measures on dedollarization of the Armenian banking system.

Mediamax reports that the Head of Armenian CB’s Monetary-Credit Policy Department Artur Stepanyan and Head of CB Department for Financial System Policy and Financial Stability Vahe Vardanyan said this in Yerevan today.

In particular, it's supposed, that changes in the structure on mandatory back-up on deposits in foreign currency will come into effect on April 14.

“The norm of mandatory back-up on deposits in foreign currency will make 12%, and on AMD deposits – 8%. This means that banks will back up 12% of each attracted deposit in foreign currency and 8% of each deposit in AMD in CB. In case the deposit is in foreign currency, the means are backed up in foreign currency, in case of AMD – in AMD”, Artur Stepanyan stated, informing that as a result of changes, ¼ of the backed-up sum in foreign currency (3% of the total sum of the deposit) will be backed up in AMD. 

“We intend to continue steps in this direction and in a few months we will oblige banks to back up in AMD already half of the backed-up 12% of the currency deposit”, Artur Stepanyan stated.

Vahe Vardanyan noted positive results of norms on limiting the opportunities of banks to have long currency positions, introduced at the end of 2009.

“By this, we aimed at limiting the opportunities of banks to speculate in the foreign currency market and form non-realistic negative expectations in the economy. We managed to do this, we introduced a requirement on long positions at the volume of 7%, after which speculations in the foreign currency market significantly reduced”, Vahe Vardanyan stated, informing that on April 26, the norm, which will introduce 7% limitation also for short currency positions of banks, will come into effect.

Vahe Vardanyan noted that depending on a particular situation, CB Board may mitigate or toughen the requirements on this norm.

CB intends to introduce changes into the norm of capital adequacy, which provides that banks should possess the corresponding capital concerning their assets, containing risks.

“If previously the risk assessment on business credits in foreign currency made 100%, implying that the bank should provide for 12% of the given credit from its own capital in order to cover any possible losses, now the level of the risk will increase up to 150%, and this means that the bank should provide for 18% of the credit at the expense of its own capital”, Vahe Stepanyan stated.

He noted that as a result of last year’s depreciation, significant increase of risks took place on credits, issued in foreign currency, and in the first half of the year, the share of sub-quality credits made 10% in the banking system.

Vahe Vardanyan expressed confidence that such a step by CB will hold back the wish of banks to continue active crediting in foreign currency and attract non-AMD means.

“Probably, some time later we will see reduction of interest rates on deposits in foreign currency, which, in the end, will lead to positive results in a struggle against dollarization”, Vahe Vardanyan stated.

He expressed confidence that as a result of the mentioned changes, the banks will not face problems, noting that to this end, CB carries out stress tests now concerning each individual bank.