On 22 November 2011, the National Bank of Ukraine held a meeting between Director of the General Department of Monetary Policy Olena Shcherbakova and the senior managers from the treasury divisions of the largest banks. The meeting was focused on issues related to the situation in the money market, outlook for money market developments and taking measures with a view to ensuring efficient money market regulation and offsetting external economic risks. During the meeting the Director of the General Department informed those present about the guidelines for monetary policy implementation.

“The economy and financial system of Ukraine are sufficiently open. Therefore, they remain vulnerable to fluctuations in the external economic conditions. In this connection, the National Bank of Ukraine takes preventative measures on a regular basis in order to prevent the signs of instability arising from tensions in the world markets,” noted Olena Shcherbakova.

According to her, one of the measures is to streamline the requirements for forming required reserves by banks and alter the required reserves formation procedure. In particular, the National Bank of Ukraine has consistently created incentives for banks to attract funds predominantly in the domestic currency and increase their maturity owing to the deepening of differentiation of required reserve ratios. At the same time, required reserve ratios with regard to funds in the domestic currency remain at zero level.

“Recent changes in the procedure for forming required reserves, coupled with the optimization of required reserve ratios, have enabled banks to form a part of the required reserves on the correspondent account with the National Bank of Ukraine, which will contribute to a more flexible liquidity management. According to estimates, in spite of the fact that the above-mentioned measures will increase total reserve requirements, they will make it possible to free short-term liquidity,” added Olena Shcherbakova.

 During the meeting the experts discussed other measures taken by the National Bank of Ukraine aimed at regulating the money market, their influence on the banking system, and agreed to coordinate their efforts to ensure the equilibrium in the money market.