16 Mar 2023 16:41

National Bank of Ukraine lowering overnight deposit certificate rate to 20%, introducing 3M certificates at 25%

MOSCOW. March 16 (Interfax) - The National Bank of Ukraine is from April 7 introducing a three-month certificate of deposit at a rate that equals the 25% key policy rate, tying the volume of investments in this instrument to the volume of household hryvnia deposits attracted by banks for a period of three months, and is also lowering the rate on overnight certificates of deposit from 23% to 20%.

"In order to minimize the above risks, the NBU Board decided, starting from April 7, 2023, to adjust the operational design of monetary policy through introducing three-month certificates of deposit with a fixed rate that equals the key policy rate. The banks' ability to invest in these CDs will depend on the volumes of their hryvnia household deposits with initial maturities from three months, as well as on how successful the banks are in increasing their volumes of these deposits," Ukrainian media quoted the NBU as saying in a press release.

The regulator said the largest banks, which enjoy noncompetitive advantages in obtaining liquidity, still have interest rates that are not attractive enough to depositors given the high current and expected inflation. As a result, a substantial portion of household funds are being kept in current accounts.

"This is generating additional risks to macro-financial stability, especially if administrative restrictions are eased further," the NBU said.