In line with the Monetary Policy Committee’s (MPC) task to evaluate, direct, and provide transparency on the monetary policy actions of the Central Bank of Aruba (CBA), the CBA informs the following. During its meeting on December 16, 2022, the MPC decided to increase the reserve requirement rate by 0.5 percentage point to 25.5 percent as of January 1, 2023. Accordingly, commercial banks must hold a minimum balance at the CBA equal to 25.5 percent of their clients’ short-term deposits. The decision to raise the reserve requirement rate by 0.5 percentage point was based on the still ample level of excess liquidity at  the commercial banks, that persisted well above the pre-pandemic level, and the diminished pace of decline in excess liquidity with preliminary data for November 2022 again recording an uptick. The 0.5 percentage point rise in the reserve requirement aims to ensure a gradual decrease of excess liquidity at all commercial banks, but the CBA is determined, dependent on the developments of excess liquidity in the coming months, to further increase the rate of increments,  if deemed necessary.

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