From October 15, NBU expands list of benchmark domestic government loan bonds that banks can use to meet reserve requirements

The National Bank is expanding the list of domestic government loan bonds, that banks can use to cover part of the required reserves (benchmark domestic government loan bonds).

This is stated in the message of the NBU, the Ukrainian News agency reports.

Thus, from October 15, 2024, the list of benchmark domestic government loan bonds will be added to domestic government loan bonds with identification numbers (ISIN) UA4000232896 and UA4000232912, the first placement of which was carried out by the Ministry of Finance of Ukraine on October 1, 2024.

In the future, the corresponding decision will contribute to the increase of activity at the auctions of the Ministry of Finance of Ukraine for the placement of domestic government loan bonds, which is important for ensuring the financing of the state budget exclusively on an emission-free basis.

From October 11, 2024, banks will be able to include a specified list of benchmark domestic government loan bonds to cover up to 60% 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 October 15, 2024, it will contain fifteen issues of securities, namely: UA4000227094, UA4000227102, UA4000227185, UA4000227201, UA4000227490, UA4000228043, UA4000228381 , UA4000228811 UA4000229116, UA4000232177, UA4000232607, UA4000232615 and new UA4000232896 and UA4000232912.

The expansion of the list of benchmark domestic government loan bonds for banks to cover part of the required reserves was approved by the decision of the board of the National Bank of Ukraine dated October 8, 2024 No. 368-rsh "On amending the decision of the board of the National Bank of Ukraine dated November 23, 2017 No. 752-rsh", which will enter into force on October 14, 2024.

As the Ukrainian News agency earlier reported, reserve requirements are one of the traditional tools of central banks.

Its content is as follows: the bank is obliged to reserve funds on its correspondent account with the central bank in the amount, which is defined as a certain percentage of its obligations (reserve ratio) and takes into account the share of required reserves that the bank covers at the account of benchmark domestic government loan bonds.

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 ensuring the effective use of the instrument itself for its intended purpose - limiting part of the free liquidity of the banking system.