NBU mulling option to form banks' mandatory reserves from domestic govt bonds - NBU governor

MOSCOW. Dec 2 (Interfax) - The National Bank of Ukraine (NBU) is considering an option for forming banks' mandatory reserves from domestic government bonds to stimulate their purchase, NBU Governor Andrei Pyshny said.

"We are considering an option related to mandatory reserves. This could stimulate banks' interest in financing through domestic government bonds," Ukrainian media quoted Pyshny as saying in an interview with Forbes.ua.

The option of introducing mandatory reserves for banks is available under agreements with the International Monetary Fund, he said.

"The situation in which we have found ourselves is unprecedented. I understand that domestic government bonds in mandatory reserves means a departure from positions that the NBU adhered to earlier. But market relations during a crisis, so to speak, have assumed certain specifics," he said.

Ukrainian banks, particularly state-owned ones, are having a colossal inflow of liquidity actually without any marketing efforts, which makes them "lazy" to some extent, he said.

NBU certificates of deposit should not be viewed as a basis for building a business strategy, Pyshny said.

As reported earlier, banks increased investment in certificates of deposit to a record high level of 320.1 billion hryvni in October, as funds in correspondent accounts increased by 6% to 67.4 billion hryvni and cash available in banks dropped by 20% to 42.9 billion hryvni, while mandatory reserves remained at a level of about 66.5 billion hryvni.