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NBU permits banks to form up to 50% of reserves with new govt bonds maturing in Aug 2024
KYIV. Jan 9 (Interfax-Ukraine) – The National Bank has named the first issue of government domestic loan bonds – benchmark-bonds, with which banks will be able to form up to 50% of the increased required reserves – this is an issue (ISIN UA4000227045) with maturity on August 7, 2024, which the Ministry of Finance first placed at an auction on January 3.
"According to the NBU, such a move will contribute to a more active participation of banks in the primary government bonds market and, as a result, to prevent emission financing of the budget deficit in 2023 and the absorption of part of the free liquidity of the banking system," the central bank said on its website on Friday.
According to it, corresponding decision No. 7 of the NBU was adopted on January 5, and it comes into force on January 10.
At the primary auction on January 3, only one buyer purchased these securities – however, immediately for UAH 1.077 billion at 19.25% per annum.
As reported, on December 8, the NBU announced that from January 11 it would increase the required reserve ratio for current accounts (demand deposits) in hryvnia and foreign currency by 5 percentage points – up to 5% and 15%, respectively, and will allow covering up to 50% of the total required reserves at the expense of benchmark government bonds.
