The demand for OVDP will increase: the NBU encouraged banks to buy more paper
The National Bank is again expanding the list of benchmark bonds of the domestic government loan, with which banks can cover part of the required reserves.
She reported about it press service National Bank.
From June 11, the list of benchmark OVDPs, which banks can include in the coverage of required reserves, will be supplemented with benchmark OVDPs with the identification number (ISIN) UA4000227490. This issue was first placed by the Ministry of Finance at primary auctions on May 2 this year.
The NBU expects that this will increase activity at auctions of the Ministry of Finance for the placement of OVDP bonds. As a result, this will avoid the “printing” of the hryvnia by the National Bank in 2023.
The list of benchmark-bonds is determined by the regulator taking into account the proposals of the Ministry of Finance and from June 11 will include seven issues of securities, six of which were determined in January-March 2023 (UA4000227045, UA4000227094, UA4000227102, UA4000227185, UA4000227193 and UA4000227201 ).
We remind you:
In March, the National Bank expanded the list of benchmark bonds of the domestic government loan (OVDP), at the expense of which banks are able to cover part of the volume of required reserves.
Since January 11, the NBU has allowed banks to cover up to 50% of the total amount of required reserves at the expense of a specified list of benchmark OVDP. The mechanism does not apply to that part of the reserves that banks form in connection with the increase in standards for certain types of funds of individuals.
The bank is obliged to reserve funds on its correspondent account in the amount defined as a certain percentage of its liabilities and takes into account the share of required reserves that the bank covers at the expense of the benchmark OVDP.
This amount must be formed on average during the reservation period. This makes it possible to smooth out possible unpredictable fluctuations in liquidity, while at the same time limiting parts of the free liquidity of the banking system