The National Bank has updated the list of benchmark bonds of the domestic state loan, at the expense of which banks are able to cover a part of the amount of required reserves (hereinafter referred to as the benchmark OVDP). Yes, from August 11, 2024:
- the OVDP with the identification number (ISIN) UA4000227045 will be excluded from the list of benchmark OVDP due to its scheduled repayment on August 7, 2024 in full;
- to the list of benchmark OVDPs will be added the OVDP with the identification number (ISIN) UA4000232177, the first placement of which was carried out by the Ministry of Finance of Ukraine on August 6, 2024. Such papers can be used to cover up to 50% of the amount of required reserves for the relevant maintenance period.
Such a decision will further contribute to increasing activity at auctions of the Ministry of Finance of Ukraine for the placement of OVDP bonds, which is important for avoiding direct financing of the budget deficit by the National Bank.
We would like to remind you that from January 11, 2023, banks will have the opportunity to include a specified list of benchmark OVDP bonds to cover up to 50% of the required reserves. The relevant list is determined by the National Bank, taking into account the proposals of the Ministry of Finance of Ukraine. From August 11, 2024, it will contain eleven issues of securities, namely: UA4000227094, UA4000227102, UA4000227185, UA4000227193, UA4000227490, UA4000228043, UA4000228381 4000228811 UA4000229116 and the new UA4000232177.
The updating of the list of benchmark OVDPs for banks to cover part of the required reserves was approved by the decision of the Board of the National Bank of Ukraine dated August 9, 2024 No. 290-rsh “On Amendments to the Decision of the Board of the National Bank of Ukraine dated November 23, 2017 No. 752-rsh”, which entered into force on August 10, 2024.
For reference
Mandatory reserves are one of the traditional tools of central banks. Its content is as follows: the bank is obliged to reserve funds in its correspondent account with the central bank in an amount that is defined as a certain percentage of its liabilities (reserve norm) and takes into account the share of required reserves that the bank covers at the benchmark account – OVDP
This amount must be formed on average during the reservation period. This makes it possible to smooth out possible conjunctural (unpredictable) fluctuations in liquidity, while at the same time ensuring the effective use of the instrument itself for its intended purpose – limiting part of the free liquidity of the banking system.
Full information on the amount of mandatory reserves formed by banks is available at the link.
