The issuing of savings certificates has become the main instrument used by the Central Bank and monetary authorities to remove money from circulation, to control inflation and stabilize the exchange rate. Statistics indicate that the amount of financial papers in circulation (zero coupon financial certificates) grew by 10.4% between December 2004 and early February 2005. During this period the Central Bank has issued RD$11.5 billion in certificates at interest rates that vary with the time requirements: at 365 days the interest is 25.95%, at 33 days it is 25.2%.
Money in circulation has fallen by RD$3.3 billion pesos during the same period, a 4.2% reduction.
The measure has been particularly effective in the exchange market where the price of the dollar over the past two months has fluctuated between RD$28.50 and RD$30.00. Central Bank sources are also reporting that commercial banks are lending less money these days, with a reduction of RD$6.6 billion, equal to 4.2% of the credit market. In December, the banks lent RD$157.7 billion and in February 2005, RD$151.08 billion.