SPAIN RAISES BANKS' RESERVE REQUIREMENT

  The Bank of Spain said it raised the
  reserve requirement for banks and savings banks to 19 pct of
  deposits from 18 pct to drain excess liquidity which threatened
  money supply and inflation targets.
      In a statement issued late last night, the central bank
  said the measure would take effect from March 13.
      "In recent weeks, there has been excess liquidity in the
  Spanish economy which, if not controlled, would threaten the
  monetary and inflation targets set by the government," the
  statement said.
      Banking sources said the measure would drain about 200
  billion pesetas from the system. The maximum reserve
  requirement allowed by law is 20 pct.
      The move follows a half-point increase yesterday in the
  Bank of Spain's key overnight call money rate, which now stands
  at 13.5 pct. At today's auction, however, the bank left the
  rate unchanged.
      Spain's principal measure of money supply, the broad-based
  liquid assets in public hands (ALP), grew at annualised rate of
  8.3 pct in January compared with 11.4 pct during the whole of
  1986 and a target of eight pct for 1987.
      Banking sources said that although the January money supply
  figures were good, compared with annualised rates of 13.9 pct
  in December and 10.2 pct in January 1986, ALP growth appeared
  to have accelerated in February, raising government concern.
      Regarding inflation, recent figures have suggested that
  prices were under control.
      Secretary of State for Trade, Miguel Angel Fernandez
  Ordonez, said this week that the annualised inflation rate for
  February, not yet officially announced, fell to 5.5 pct from
  six pct in January, compared with inflation of 8.3 pct during
  1986 and a government target of five pct for this year.
  

