Having analyzed the dynamics of the macroeconomic fundamentals, the Board of the National Bank of Ukraine pays attention to the positive trends in the development of the economy and money market, which have persisted in 2012. This result was achieved due to the balanced monetary policy.

On the one hand, owing to the monetary policy pursued by the National Bank of Ukraine, the annual rate of CPI inflation continued to decline from 3.7 % in January to 3.0 % in February. On the other hand, the National Bank of Ukraine ramped up lending by using a set of monetary policy instruments, which resulted in increasing volumes and falling value of refinancing loans and liberalization of terms and conditions for carrying out direct repo transactions.

The measures taken by the National Bank of Ukraine encouraged savings of funds, enhancing confidence in hryvnia and the banking system, as evidenced by an upward trend in household deposits, which rose by 2.3 % in February (by 4.7 % from the start of the year). At the same time, national currency deposits from households (3.0 %) grew at a faster pace than foreign currency ones (1.5 %).

Increasing interest shown by households in the national currency savings contributed towards reducing the demand for foreign exchange in the cash segment of the foreign exchange market. In February 2012, the net demand for foreign exchange declined to USD 373 million, compared with USD 556 million in January 2012 and USD 740 million in December 2011.

Against the backdrop of improving market expectations and increasing resource base, the banks were reducing the cost of resources. Thus, the average weighted interest rate on national currency loans went down from 17.2 % in December 2011 to 15.3 % in February 2012, whereas that on national currency deposits declined from 11.1 % to 10.5 %.

The above-mentioned developments and favorable price dynamics create the possibility for providing additional incentives to ramp up lending to the real sector of the economy, in particular, through the use of interest leverage and the introduction of more flexible approaches to forming the required reserves by banks by reducing the share of reserves formed by banks on a special account with the National Bank of Ukraine from 70 % to 60 %.

However, the instability of the international financial markets determines the need to minimize possible risks to monetary unit stability and de-dollarization of the economy, which will be facilitated by the deepening of differentiation of required reserve ratios towards strengthening the preferential reserve requirements for the funds attracted in the national currency.

Apart from that, given the fact that Russian rubles are used in settlement between NJSC "Naftogaz of Ukraine" and OJSC “Gazprom” for imported gas and the need to optimize the management of the gold and foreign exchange reserves, with a view to supporting the government's economic policy pursuant to Article 6 of the Law of Ukraine “On the National Bank of Ukraine”, it is deemed expedient to set a zero required reserve ratio on the long-term funds attracted by banks from non-resident banks and non-resident financial institutions in Russian rubles.

In view of the above, pursuant to Articles 6 and 25 of the Law of Ukraine “On the National Bank of Ukraine”, Regulation on the NBU Interest Rate Policy approved by Resolution of the Board of the National Bank of Ukraine No 389 of 18 August 2004 registered with the Ministry of Justice of Ukraine under 1092/9691 of 2 September 2004 (amended), as well as Regulation on the Procedure for Forming the Required Reserves for Ukrainian Banks and Foreign Banks’ Branches Operating in Ukraine approved by Resolution of the Board of the National Bank of Ukraine No 91 of 16 March 2006, registered with the Ministry of Justice of Ukraine No 312/12186 of 23 March 2006 (amended), the Board of the National Bank of Ukraine approved Resolution “On the Money Market Regulation” No 102 of 21 March 2012 , which stipulates the following:

1. The discount rate should be set at 7.5 % per annum. (effective from 23 March 2012).

2. The following procedure for forming the required reserves by Ukrainian banks should be established: (effective from 31 March 2012):

2.1. 60% of the required reserves formed by banks for the previous reporting period of reserving should transferred to a  special account with the National Bank of Ukraine No3203  “Funds of required reserves transferred by banks”;

the remaining amount of the required reserves formed pursuant to the ratios established for the corresponding period should be formed on a correspondent account with the National Bank of Ukraine.

2.2. The following required reserve ratios for forming required reserves by banks should be established:

National currency time funds and deposits of legal entities and natural persons – 0;

Short-term foreign currency funds and deposits of legal entities and natural persons – 8;

Long-term foreign currency funds and deposits of legal entities and natural persons – 2;

demand deposits of legal entities and natural persons in the national currency and funds held in current accounts – 0;

demand deposits of legal entities and natural persons in the foreign currency and funds held in current accounts – 8.5;

funds attracted by banks from non-resident banks and non-resident financial institutions in the national currency – 0;

funds attracted by banks from non-resident banks and non-resident financial institutions in the foreign currency (except for Russian rubles) – 2;

funds attracted by banks from non-resident banks and non-resident financial institutions in Russian rubles – 0.

2.3. The amount of required reserves, which shall be kept daily on the bank correspondent account with the National Bank of Ukraine at the beginning of a business day, should constitute not less than 30 % of the amount of the required reserves formed by banks for the previous reporting period of reserving.

3. The following documents shall be declared null and void:

Resolution of the Board of the National Bank of Ukraine N 377 of 9 August 2010 “On the Money Market Regulation” (from 23 March 2012).

Items 1, 2 and 3 of Resolution of the Board of the National Bank of Ukraine “On Certain Issues related to the Money Market Regulation” No 407 of 15 November 2011 (from 31 March 2011).