Liquid asset reserves

(1) Every licensed bank shall maintain a minimum aggregate holding of approved liquid assets which on average shall be equivalent in value to at least fifteen per centum of its average demand deposit liabilities, plus at least ten per centum of its average deposit liabilities other than demand deposit liabilities, or shall be such higher proportions of such demand deposit or other deposit liabilities as may from time to time be prescribed or specified by the Central Bank by notice published in the Gazette or by thirty days prior notice in writing, provided that the percentage shall be the same for each such bank. (2) The average specified in sub-section (1) shall be computed as follows– (a) the average aggregate holding of approved liquid assets shall be the average of the aggregate amounts of such assets held as at the close of business on the Wednesday of each week in any month as may be prescribed by the Central Bank from time to time; (b) the average amount of the deposit liabilities shall be as specified and computed as section 39 (2)(b). (3) The Central Bank may vary, by thirty days prior notice in writing to each licensed bank, the method to be used in computing the averages specified in sub-section (2) and such method shall be the same for each such bank. 87 (4) For the purpose of this section, “approved liquid assets” means assets that are freely and readily convertible into cash without significant loss, free from any charge, lien or encumbrance whatsoever and includes all or any of the following– (a) notes and coins which are legal tender in Belize and such foreign notes and coins as the Central Bank may specify in writing; (b) balances and deposits held in accounts with (c) net balances and deposits held with other licensees in Belize and not exceeding ninety days to maturity but where such balances are negative they will be subtracted from the approved liquid assets; (d) net amount of cheques and other sight drafts drawn on other licensed banks in Belize and in the course of collection, with net negative amounts being subtracted as provided for in the immediately preceding sub-section; (e) balances and deposits at call and at short notice not exceeding ninety days held with banks and financial institutions outside Belize and denominated in currencies freely convertible into dollars net of any or all of the following balances due within ninety days– (i) balances due to banks and financial institutions abroad; (ii) balances due to head office and other branches abroad; 88 (iii) balances due to body corporate or parent body corporate or any body corporate that owns the majority of the shares of a bank or financial institution; and (iv) other foreign liabilities due within ninety days; (f) inland bills of exchange which are financing commercial transactions, which bear the acceptance or confirmation of acceptance of another licensee in Belize and which are payable in not more than ninety days from the date on which they were drawn or accepted; (g) treasury bills and other securities issued or guaranteed by the Government of Belize and maturing in not more than ninety days; and (h) treasury bills and other securities which have been issued or guaranteed by governments abroad, which are marketable in money and capital markets abroad, which mature in not more than ninety days and which are denominated in currencies freely convertible into dollars. (5) The Central Bank may declare, by notice in the Gazette or by thirty days prior notice in writing, any of the assets described in this section to have ceased to qualify as approved liquid assets for purposes of this section. (6) The Central Bank may, by thirty days’ notice in the Gazette, require any type of licensed financial institution to maintain a minimum aggregate holding of approved liquid assets which on average shall be equivalent to such value and in 89 such proportions as the Central Bank may determine, provided that such requirements shall be the same for each such type of licensed financial institution so required. (7) Any licensed bank which, during any month, fails to maintain its holding of approved liquid assets in the aggregate quantity and proportions prescribed by the Central Bank in accordance with this section shall be liable to pay, on being called upon in writing to do so by the Central Bank, a sum equivalent to ten per centum of the amount by which such holding falls short of the prescribed level, and such charge shall be payable to the Central Bank on such day as may be fixed by the Central Bank and may be recovered by deduction from any balance of the licensee with the Central Bank. (8) Upon receipt of an order under sub-section (7), the licensed bank or licensed financial institution shall have ten days to object to the order on the basis that such a contravention has not taken place, and shall provide evidence to support its claim, at the end of which period the Central Bank shall either confirm or revoke the order.