As part of rehabilitation of CB PRIVATBANK PJSC, NBU monetized domestic sovereign bonds issued by Ministry of Finance after its transition to state ownership. For this reason, NBU purchased domestic sovereign bonds in amount of UAH 29.8 billion on 28 December 2016.
Funds received by CB PRIVATBANK PJSC from sale of domestic sovereign bonds to NBU were aimed at repayment to NBU under refinancing loans. Yesterday after monetization, CB PRIVATBANK PJSC repaid debt to regulator.
Therefore, as to CB PRIVATBANK PJSC, funds received from monetization of domestic sovereign bonds will not be aimed at covering outflows of deposits from banks and will not not exert significant upward pressure on FX market anf inflation level.
As a side note, proposition that outflow of deposits from bank provokes excessive demand in the FX market has no substance. Inflow of households’ funds to other banks two-fold exceeded the outflow of households’ deposits from CB PRIVATBANK PJSC on 19 December 2016. Moreover, period of the outflow was short: only three days, and then the return of individuals’ funds to financial institution recovered. At the same time, inflow to accounts of legal entities in other banks under VAT refund compensated the outflow of deposits of legal entities from CB PRIVATBANK PJSC.