Both cuts in interest rates are inter-banking lending only; it has zero (0) to do with actual rates related to the ones offered by the CDs or yields for savings of any kind.
In fact, the current cuts to interests to both fields will create higher yields in the long run to unrelated rates, as the CB can disburse higher amounts to the local banks with a comparable higher ROI due to volume in transactions done.
A given Bank can ask another Bank to provide a loan to invest on a deal or to complete the required reserve minimum on hold in the CB. The CB just made what the FED does in the US; it lowered the rate at which the DR's Banks loan to each other funds thus enabling a quick jump on the economy. This comes at the price of inflation! As the Banks loan to each other, the only solid guarantee the loaning Bank holds is the reserves from the loaned to Banking institution there. If the collateral is deemed less than the outstanding value of the loan, both Banks could be in big trouble and the CB must step in to correct any damages that could reflect negatively in the economy.
The thing that happened before with Baninter and others is the same effect, both requested loans that surpassed the collateral interest for such outstanding notes. As one Bank was unable to collect the yield, much less the actual loan capital, the damages hit the other non-related institutions as the CB had to step in to avoid a domino collapse of the Banking institutions unrelated to the primary default.
I told you that the CB reserves were going to be used to ease up the congestion of loans not reaching our deprived internal economy. By lowering the rates the CB in effect is creating the way so that Banks can borrow money for short term high yield loans to clients, and yet still provide security to the overall economy still recovering from the inflationary trends.
The CB will soon also roll out a phase to have local Banks tap the reserves as collateral to disburse loans to the clients at lower interest rates with easy terms. All this with the CB providing the backbone to any defaulted loans.
Providing a way for more people to obtain car and home loans.
One thing we're not doing is basing our internal economy solely on consumerism as the US, but actual solid investments in a controlled economy of sorts. Think how the RE value in the DR retains the equity gained with less loses than the comparable US and EU markets.
Or, you could join the line of "some" people waiting to buy Cap Cana's properties with pennies on the Dollar... LOL!!!!
I think that the cuts were not aggressive enough as it was discussed, but something is better than nothing at all...