(Business in Cameroon) – The Bank of Central African States (Beac) launched a successful liquidity offer of CFA 120 billion for banks on July 30. Credit institutions quickly rushed for the offer and the total demand reached CFA 511 billion, more than four times the available amount, according to the closing statement of the operation.
This strong dynamic, observed since these liquidity injection operations resumed in June 2024, indicates a cash flow need among Cemac bankers after several months of austerity imposed by the central bank. Since late 2021, Cemac credit institutions have faced a restrictive monetary policy from Beac, aimed at drying up their reserves to restrict credit access for economic agents.
Following a gradual increase in key interest rates designed to toughen refinancing conditions at the central bank’s counters, Beac intensified its liquidity withdrawal operations from banks. It then suspended its liquidity injection operations into the Cemac banking system from February 2023 and launched Beac bills, instruments aimed at further drying up banking liquidity. The central bank justified this austere monetary policy as a measure to combat the 20% inflation rate attributed to monetary factors.
However, with inflationary pressures easing in Cemac in recent months, the central bank has started to loosen its grip on banking liquidity. To do this, it decided, since June 11, 2024, to resume its liquidity injection operations into banks, with increasingly larger volumes, ranging from CFA50 billion to CFA185 billion per operation.
