The National Bank of Ukraine (NBU) decided to introduce a 3-month deposit certificate with a fixed rate at the discount level from April 7.
This is stated in the message of the NBU, Ukrainian News Agency reports.
It is noted that interest rates on hryvnia time deposits continue to rise, including due to the previous measures of the National Bank.
Banks that most actively raised rates in recent months were able to improve the term structure of the deposit base.
However, in the largest banks, which, in particular, enjoy the non-competitive advantages of obtaining liquidity, hryvnia rates remain insufficiently attractive for depositors in view of the high level of current and expected inflation.
As a result, a significant amount of public funds is stored in current accounts.
This generates additional risks for macro-financial stability, especially if administrative restrictions are further eased.
In order to minimize the mentioned risks, the Board of the National Bank decided to adjust the operational design of the monetary policy from April 7, 2023 by:
- introduction of a three-month deposit certificate (DC) at a fixed rate at the level of the discount rate. The ability of banks to place funds in such DCs will depend on the volumes of the hryvnia household deposit portfolios formed by them with an initial placement period of three months or more, as well as on the success of the growth of such portfolios. The first quantitative tender for placement of DC for a period of up to three months is scheduled for April 7, 2023. Detailed parameters of banks' participation in the specified tender will be announced to banks by April 6, 2023. The National Bank plans to use this tool for at least a year;
- overnight deposit rate reduction to 20%.
In addition, it was decided that from May 11, 2023, preferential standards for the formation of mandatory reserves by banks for term funds in the accounts of individuals in national (0%) and foreign currencies (10%) will apply only to deposits with an initial term of three months or more.
The implemented measures will strengthen market incentives for banks to attract time deposits of the population in hryvnia, which will reduce risks for the foreign exchange market and international reserves at the stage of easing currency restrictions. In particular, they will contribute to:
- further growth of interest rates on time deposits, and accordingly - strengthening of protection of citizens' hryvnia savings against inflationary depreciation;
- development of the hryvnia savings culture;
- revitalization of banks' activity on the interbank market;
- strengthening the status of the discount rate as an effective tool that has a significant impact on the state of the money market and the business behavior of economic agents.
As Ukrainian News Agency earlier reported, the National Bank increases by 5 p.p. the norm of formation of reserves for funds on demand and funds in the current accounts of legal entities and individuals from February 11.
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