Lower key rate, liberalization of the reserve account, use of liquidity buffers
An arsenal of measures has been put in place by Bank Al-Maghrib since the outbreak of the health crisis. A period which coincided with the holding of the first two quarterly meetings of the central bank during which advantageous measures were adopted. The flagship measure remains the downward revision of the bank’s key rate, which has been around 2.25% for years. This rate has been reduced twice in just three months. Just last week, the Board of Bank Al-Maghrib decided to apply a key rate of 1.5%, a reduction of 50 basis points against a drop of 25 points last March. A decision that comes in support of recovery for which the central bank has drawn a V scenario. This assumption assumes a rapid recovery in economic activity after contraction.
A restart which requires strong support from the banks as well as the implementation of measures favoring a real recovery of the Moroccan economy. Among the measures freshly dictated by the central bank, we also cite the complete liberalization of the reserve account. It thus goes from 2% to 0%, or an injection of 10 billion dirhams for the benefit of local banks. It was also decided to implement specific measures to refinance bank loans to participating banks and micro-credit associations. The bank also announces its agreement to the banks to use during the second quarter of the year, if necessary, the liquidity cushions constituted in the form of high-quality liquid assets below the minimum ratio of LCR (Liquidity Coverage Ratio), set at 100%. In this sense, the central bank reiterates its commitment to ensuring that its decisions are passed on to the real economy and to favoring the banks that make the most efforts in this regard in the context of its refinancing operations. Note that since the beginning of the crisis, the central bank has activated all of the refinancing instruments available in dirhams and in foreign currencies.
It also extended the TPME financing program to cash loans in addition to equipment loans. To give banks more visibility, this decision was accompanied by an increase in the frequency and a lengthening of the maturity of operations. Bank Al-Maghrib has, among other things, granted refinancing in foreign currencies, guaranteed by an eligible collateral in foreign currencies and in dirhams.
On a prudential level, Bank Al-Maghrib has decided to postpone, under the June 2020 decree, the provisioning of credits which will be subject to a moratorium by the banks. The central bank also decides to relax the conservation capital buffer over a 12-month period to 50 basis points, reducing the regulatory thresholds to 8.5% for the Tier 1 capital ratio to 11.5%. for the capital adequacy ratio. Bank Al-Maghrib also asked credit institutions to suspend the distribution of dividends for 2019 until further notice and to temporarily relax the classification rules the provisioning of overdue claims of micro-credit associations. It should be recalled that in the context of requests for the extension of credit maturities, ad hoc reporting has been put in place. Credit institutions have been called upon to reinforce transparency with customers on the implementation methods and to deal with complaints relating thereto within 72 hours.
Bank Al-Maghrib worked for the deployment of measures to accelerate the use of mobile payments and the use of digital financial services through the temporary easing, until the end of June 2020, of the procedures for opening payment accounts level 2 as well as the reduction of the documents required for the enrollment of local merchants for the acceptance of mobile payment.
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