3 ability of the bank to meet the conditions of secondary reserve
In the synchronous area of the continental Europe (UCTE area) the requirements for reserve capacities are given separately for the primary reserve and the secondary reserve .
The size of the secondary reserve to be held by each country is not precisely defined by UCTE.
Carter is also convincing in pointing out the futility of earmarking secondary reserves to meet cash withdrawals in a general or competitive crisis.
Carter points out that the secondary reserve function of normally liquid credit assets was dissipated in a general or competitive crisis, so holding large amounts of liquid assets, instead of more direct loans, was a misallocation of bank credit.
Alvaro Guerrero-Ferber, Executive President said: "The Board's decision to increase the cash dividend reflects the high liquidity and secondary reserves
of the Bank, as well as the earnings obtained in the first quarter of 1996 and projections for the rest of the year.
Secondary reserves as % of nonaccrual loans (2) 202% 197% 130%
2) Secondary reserves ratio calculated as actual reserves less 1% of period-end accrual loans as a percent of nonaccrual loans.
2) Secondary reserves
ratio calculated as actual reserves less 1% of period- end accrual loans as a percent of nonaccrual loans.
Reserve for Loan Losses Beginning balance $350 $357 $400 Provision 1 0 8 Net charge-offs (2) (14) (7) (21) Ending balance $337 350 $387 Reserves as % of nonaccrual loans 218% 191% 135% Secondary reserves
as % of nonaccrual loans (3) 166% 147% 106%
From a financial system standpoint, a secondary reserve buffer cannot provide liquidity in times of stress without access to a method to increase quickly the quantity of base money.
Antipathy toward the call loan market and its de facto use as a secondary reserve was a central common element among the key critics of the financial system.