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Macau’s new minimum liquidity requirements

Notice No 002/2013-AMCM of the Monetary Authority of Macau (AMCM), which supersedes Notice No 6/93-AMCM dated September 1, entered into force on January 28 2013. It was enacted by the AMCM pursuant to section 6, paragraph 3a) of the Financial System Act (FSA) of Macau.

The new Notice establishes new rules concerning cash in hand and minimum liquidity requirements that must be accomplished by all banks except banks with an offshore licence.

The Notice keeps the same definitions as regards to cash in hand, liquid assets and basic liabilities that were introduced by the revoked Notice.

In accordance with this new regulation, the liquidity rules are as follows:

Firstly, the daily amount of cash in hand of the banks in each week must not be less than the sum of the following percentages of the average of the basic liabilities classified by term and calculated in the preceding week: 3% of liabilities at sight; 2% of liabilities up to three months excluding liabilities at sight; and 1% of liabilities beyond three months.

Secondly, the daily amount of the balances of the current accounts in patacas held with the AMCM in the name of each bank in each week must not be less than 70% of the abovementioned minimum amount of cash in hand.

The liabilities at sight are all the basic liabilities immediately payable.

As was already required in the previous Notice, at the end of each month, the amount of liquid assets, as defined therein, must not be less than 30% of the total value of the basic liabilities.

As a matter of fact, requisites that were in force 20 years ago seem to not have changed substantially, although it should be noted that banks with an offshore licence are now exempted.

Pedro Cortés and Marta Mourão Teixeira

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