Financial Repression Tracker

Rules that steer savings into government debt or hold returns below inflation, country by country.

Steer · Captive demand

Reserve requirements payable in government paper

What it is
Rules letting (or steering) banks meet their compulsory cash-reserve requirement with Treasury bills or bonds instead of central-bank money, often only with paper bought at primary auction or at a fixed administered rate.
Why it counts
A non-negotiable regulatory holding is converted into a guaranteed outlet for new government debt, giving the Treasury a captive buyer whose demand is set by deposit volumes rather than yield.

When it was in force

  • Italy: 1962 → 1963, historical; the rule may be older than the cited document; its end is not documented
  • Argentina: 2021, historical; its end is not documented
  • Argentina: 2022, historical; the rule may be older than the cited document; its end is not documented

3 examples

  1. Italy

    1962 → 1963Historical

    The rule may be older than the cited document · Its end is not documented · As cited: early 1960s (option narrowed 'beginning in December', per the 1963 Monthly Review)

    Italian banks had been free to choose their own mix of cash and Treasury bills to meet the 22.5% reserve requirement; under the reform they had to hold at least 10 points in cash, and bills needed for reserve purposes were sold at a fixed 3.5% rate outside the auction.

    Bank of Italy compulsory reserve regime (total 22.5% of deposits, payable in cash or Treasury bills) and the accompanying Treasury bill issuance reformSecondary source
    “as against the previous option of determining their own mix of cash and bills”

    newyorkfed.org (opens in a new tab)Checked: quote matched on the page by script

    Italy today: index 49.2

  2. Argentina

    2021Historical

    Its end is not documented

    Banks allowed to meet part of their reserve requirement with central-bank LELIQ could instead use peso national government securities of 180-450 days bought at primary subscription.

    Banco Central de la República Argentina, Comunicación "A" 7290 of 27/05/2021 (amending the 'Efectivo mínimo' rules, point 1.3.16)Primary source
    “podrán también integrarla con títulos públicos nacionales en pesos que no estén vinculados al dólar estadounidense”

    bcra.gob.ar (opens in a new tab)Checked: quote matched on the page by script

    Argentina today: index 40.1

  3. Argentina

    2022Historical

    The rule may be older than the cited document · Its end is not documented

    Large banks could meet their peso reserve requirement with a specific Treasury bond maturing 23 May 2027, which was also excluded from public-sector exposure limits.

    Banco Central de la República Argentina, Comunicación "A" 7511 of 12/05/2022Primary source
    “podrán integrar la exigencia de efectivo mínimo en pesos –del período y diaria– con “Bonos del Tesoro Nacional en pesos vencimiento 23 de mayo de 2027””

    bcra.gob.ar (opens in a new tab)Checked: quote matched on the page by script

    Argentina today: index 40.1

Examples and their dates reviewed .

Further reading

12 more on captive demand