The Central Bank has decided yet again to "demonetize" DR$12.3billion. What this entails is literally taking money out of the hands of the regular people and the existing banks. With the new measures, banks will now have to give a larger percentage of their money to the Central Bank. This leaves the banks more illiquid and more prone to a run on the remaining cash.....and thus more vulnerable. Banks will now have to offer higher rates to attract more depositors....but at the same time the banks will probably charge more money for longer term loans such as housing and autos.
The net effect of this is an even further choking off of the local DR economy. Malkum and the Central Bank are ON PURPOSE putting the DR economy and its banks at further risk of default.
They are doing this in order to stop the fall of the DR$ peso. They want to chage the supply/demand balance of the US$/DR$ by sucking out DR$.
VERY IMPORTANT: note that most sane thinkers know that cutting government spending is the way to limit the growth of DR$. But they are not doing this. They are basically taking money away from all DR folk except those under the employ of the PRD. These guys are evil.
http://www.elcaribe.com.do/periodico.../editorial.asp
This article in Spanish does a good job explaining the actions of the Central Bank.
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Malkum endangers health of DR Banks
