Not only the volume, but also the variation, of demand for central bank funding over time could be affected by the regulation. This might also play a role in determining the appropriate size of open market operations. It’s possible that on some days banks will seek financing from the central bank for regulatory purposes more than they do on other days.
In July, we extended this recommendation by another three months until the end of this year. This was not an easy move. Under normal conditions, profitable and healthy banks should not be prevented from remunerating their shareholders. Restricting dividends can increase banks’ funding costs, have an impact on their access to capital markets and make them less competitive than their international peers.