The Bulgarian National Bank (BNB) has taken measures to restrict lending and control the growth of inflation. The central bank’s decision is to more than double the minimum required reserves of banks.

This is happening two days after the BNB reported as a risk the rapid growth of lending from commercial treasuries.

The decision of the BNB envisages an increase in reserves in two steps, which will be very close to each other in time. First, from June 1, banks will be required to set aside not 5%, but 10% minimum mandatory reserves for the funds attracted by non-Bulgarian citizens. A month later, from July 1, banks will have to set aside 12% minimum reserves for funds drawn from both residents and non-residents.

Current macroeconomic developments are characterized by accelerated rates of consumer price growth, high private sector wage growth, strong consumer demand and continued high growth in household credit. The continuation of these trends creates potential risks in terms of the stability of the banking system and in terms of the fulfillment of the BNB’s main objective of maintaining price stability, the central bank’s management board stated in its reasons for its decision.