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NBU Adapts Monetary Policy’s Operational Design to New Conditions in Financial Markets

Starting 19 March 2019, the NBU will pursue its monetary policy in line with a new operational design that gives the banks greater flexibility as they manage their liquidity in response to heightened turbulence in the financial markets.

First, the central bank has changed the schedule of liquidity regulation transactions. Tenders to place certificates of deposit and issue short-term refinancing loans will now take place twice as often as before, i.e. every Friday.

Second, the NBU has changed the maturities of these liquidity regulation instruments. Two-week certificates of deposit will now take one week to mature, while short-term refinancing loans that used to mature in 14 days will be granted for up to one month.

The interest rate on these instruments will be set equal to the central bank’s key policy rate, as before.

The adjustments to the tender schedule and maturities of liquidity regulation instruments will shore up the banking sector’s resilience to turbulence in the financial markets and reinforce its ability to stimulate the Ukrainian economy as uncertainty grows.

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