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The central reserve bank can purchase treasury bonds in the secondary market for monetary policy purposes only, with a limit of up to 5 percent of the outstanding stock of base money.
At the same time, risk weights were lowered to Basle levels (previously, risk weights were somewhat higher than Basle requirements), thus broadly offsetting the effect of the increase in capital requirements on bank capitalization.
In some cases the value of the collateral exceeds the size of loans, in which cases it would add an additional degree of protection.
This definition does not incorporate the net forward position of banks in foreign currency. When these operations are accounted for, the overall net foreign position of banks was positive by about US$0.6 billion in March 1998.
The law also allows the deposit insurance fund to have access to lending from the treasury, but not from the central bank.