On May 16, 2025, the BEAC injected CFAF320 billion into the CEMAC banking system, but banks requested CFAF540.9 billion. This liquidity demand emerged after the central bank lowered its key rate in March 2025, aiming to ease conditions for banks and stimulate economic activity. However, high liquidity thirst continues to challenge the sector.
On May 16, 2025, the Bank of Central African States (BEAC) made a notable liquidity injection of 320 billion CFA francs into the CEMAC banking system. However, this figure was significantly less than the 540.9 billion CFA francs that commercial banks had requested across the six-nation bloc. The high demand for liquidity highlights a pressing need still felt by financial institutions in the region.
This demand arose just two months after BEAC’s Monetary Policy Committee decided to lower its key policy interest rate, aiming to create a more favorable monetary environment. On March 24, 2025, the central bank reduced the interest rate on tenders, known as TIAO, from 5% to 4.5%. This was the first cut since late 2021, a move that countered a series of previous rate increases that had tightened credit access.
The intention behind this rate reduction was two-fold: to facilitate commercial banks’ refinancing processes with the central bank and to encourage those banks to lower their lending rates to businesses and other economic entities. Ultimately, the goal was to stimulate economic activity within the region. However, despite these efforts, banks are still facing significant challenges as they grapple with a high demand for liquidity, indicating that issues persist within the CEMAC banking sector.
The situation raises questions about the efficacy of the central bank’s measures, as the liquidity injection failed to fully satisfy commercial banks’ needs. The ongoing constraints illustrate that the challenges within the banking system remain an acute concern, even with supportive monetary policies in place. Analysts will be watching closely to see how this impacts the broader economic landscape in CEMAC in the coming months.
The BEAC’s recent injection of CFAF320 billion into the CEMAC banking system highlights ongoing issues with liquidity demands among banks in the region. Despite a monetary policy shift aimed at easing financial conditions, commercial banks seem to continue experiencing considerable pressure. This signals that the challenges facing the CEMAC banking sector are far from resolved, even with attempts to stimulate economic activity through lower interest rates.
Original Source: www.businessincameroon.com
