CENTRAL BANK TIGHTENS MONEY SUPPLY.

The Central Bank on April 15 expanded the range of bank liabilities covered by cash reserve requirements to include commercial paper and all other credit and fund raising instruments. The move was designed to reduce liquidity in the financial system and get a handle on expanding credit in order to reduce pressures on the balance of payments and exchange rate caused by increased demand for credit and spending on imports resulting from economic growth. The bank reduced the actual reserve requirement from 24% to 21% of liabilities for commercial banks, but expansion of the list of covered liabilities will remove an estimated additional TT$540 million (US$85.7 million) from the system, increasing the overall share of banks'cash required to be held in reserve.