The National Bank is expanding the list of benchmark bonds of the domestic state loan (OVDP), at the expense of which banks are able to cover part of the volume of required reserves (OR).
Thus, since March 11, banks have been given the opportunity to include benchmark OVDP bonds with identification numbers (ISIN) UA4000227185, UA4000227193 and UA4000227201 in the coverage of mandatory reserves. The added issues of securities were first placed by the Ministry of Finance at primary auctions on February 28, 2023.
According to the National Bank’s estimates, such a step will contribute to a further increase in activity at the auctions of the Ministry of Finance for the placement of OVDP bonds, which will make it possible to avoid direct financing of the budget deficit by the National Bank in 2023.
The above-mentioned list of OVDP benchmarks is determined by the National Bank taking into account the proposals of the Ministry of Finance. From March 11, 2023, it will include six issues of securities, three of which were added in January and February 2023 (UA4000227045, UA4000227094, UA4000227102).
We will remind that with On January 11, 2023, banks got the opportunity to cover up to 50% of the total amount of mandatory reserves at the expense of the specified list of benchmark OVDP. At the same time, there is an exception to this rule: the benchmark OVDP coverage mechanism will not apply to part of the reserves that banks will form in connection with by increasing mandatory reservation standards from March 11.
The expansion of the list of benchmark OVDPs for banks to cover part of the required reserves has been approved by the decision of the Board of the National Bank of Ukraine dated March 3, 2023 No. 86-rsh “On Amendments to the Decision of the Board of the National Bank of Ukraine dated November 23, 2017 No. 752-rsh”which enters into force on March 10, 2023.
