The SA Reserve Bank on Saturday took further steps to relieve pressure on the country's banks, saying it was considering lowering the liquidity coverage ratio and the specified minimum requirement of capital and reserve funds to be maintained by banks.
The measures are aimed at making it possible for banks to continue lending through what is expected to be a period of a shortage of liquidity, a rise in defaults and decline in banks' profitability as the economic crisis precipitated by the Covid-19 outbreak grips SA.
Both the measures have been published for comment by the bank's Prudential Authority before they are implemented. For at least the past week, SA's financial markets have been hit by a shortage of liquidity as both domestic and foreign investors flee to safe havens such as the dollar and US treasuries.
Last week, the bank took several steps to increase liquidity, particularly in the bond market, saying it would step into the market to buy government bonds. Under Basel III requirements, banks were required to raise the stock of high-quality assets that can be converted into cash easily and immediately in private markets should the bank come under stress.