The National Bank remains involved in consistent efforts to improve its monetary policy toolkit with a view to addressing current challenges and laying the foundation for the fulfilment of mid-term tasks.

In particular, from August 19, 2014, the requirement obliging banks to keep a portion of the mandatory reserves on a special account with the National Bank of Ukraine (hereinafter – the National Bank) will be repealed.

Pursuant to NBU Board Resolution No. 480, dated August 8, 2014, amending NBU Board Resolution No. 371, dated September 19, 2013 (as amended) (hereinafter – Resolution No. 480), starting from August 19, 2014, banks shall keep the total amount of mandatory reserves in their own correspondent account with the National Bank.

Under the provision that currently remains in effect, banks are obliged to keep 20% of the mandatory reserves built up in the previous provisioning period under report on a special account with the National Bank. Banks are required to build and hold the residual amount of mandatory provisions made pursuant to the ratios established for the corresponding period in the bank correspondent account with the National Bank.

The move is intended to give banks greater flexibility in managing their own liquidity by providing them with additional operational liquidity of approximately UAH 7 billion.

Bearing in mind the mid-term tasks, the above mentioned decision should be regarded as an important element in improving the operational structure of the monetary policy in the context of a transition towards an inflation-targeting regime in mid-2015.

In addition to the above-mentioned, Resolution No. 480 envisages cancelling the preferential procedure of mandatory provisioning under borrowings in Russian roubles, under which a zero reserve ratio was applied to these funds. Presently, the need to encourage banks to attract funds in Russian roubles has lost its relevance. Consequently, the required reserve ratio applied to funds attracted in Russian roubles shall be the same as that applied to funds attracted in any other foreign currency.