According to a circular, the CBE could provide in the future urgent liquidity to solvent banks if they fail to get it from interbank or financial markets.
It said that emergency liquidity is among several instruments provided by central banks to support banks facing liquidity crises in the short term that threaten operations.
The emergency liquidity will only be made available for a maximum period of 180 days, the CBE said, adding that the liquidity could be extended for a further period based on the bank’s financial position.
The liquidity would be priced at a premium of at least five percent above the overnight lending rate, it said.
The CBE can disclose the emergency liquidity provided to any local bank if necessary to maintain monetary stability and confidence in the banking sector, it said.
Commenting on the announcement, Radwa El-Swaify, head of research at Al-Ahly Pharos Securities, told Ahram Online that the central bank’s decision is just an “executive regulation of an old law,” in reference to the banking law.
It is “nothing new” she said.