On 1 December 2019, the NBU introduces a new instrument of banking system liquidity regulation - discount certificate of deposit - to stimulate interbank money market.
The certificates will be placed through the tender at the price lower than their face value. The difference between the amount paid for the discount CD and its face value will be the instrument’s return.
Introduction of the new instrument will allow the NBU to do additional CD placement. It will, in its turn, facilitate the increase in secondary market liquidity through the circulation of instruments with single-type characteristics.
The NBU views the discount CD as an additional instrument to regulate baking liquidity and will continue to tender interest-bearing CDs. The latter are placed as the overnight and longer-term instruments (up to 14 days and/or up to 100 days), the discount CDs, at the same time, will be placed for terms longer than overnight.
Respective technical works are required before the new instrument can be introduced, so the debut placement of discount CDs will be possible in December 2019.
The NBU will also take measures to prevent participation in the CD placement of the banks that failed to transfer the amounts they bid on and also failed to pay the respective fine within seven days of the receipt of notice from the NBU. Under the new procedure, the access to the CD placements will be renewed after the payment of fine. This rule will come into force on 1 December 2019 and will be preventive as the NBU has so far no record of any banks violating this rule.
The above amendments have been approved by NBU Board Resolution No. 137 of 13 December 2018 On Approval of Amendments to the Regulation on the Use of Standard Banking System Liquidity Regulation Instruments.