The outflow of funds from the banking system

Operations for the sale of foreign currency in the interbank market, as appropriate impact on the liquidity of the banking system. The volume of correspondent accounts of banks in February decreased by 17.3% (YTD - 19.2%) to 15.1 bln. In a way reducing the banks' liquidity constrained due to reduction of government funds in national currency in the accounts of the National Bank of 24.6% to 6 billion USD. In order to support the liquidity of banks in February, the National Bank to refinance the banks for a total amount of 15.2 billion UAH. (From the beginning of the year - almost 20 billion USD. ) With a view to improving the redistribution of temporarily free funds between banks, National Bank in February, did not stop the operations of banks to raise funds. During the month, the volume of transactions was raised 1.95 billion USD, with the beginning of the year - 3.4 billion UAH. Weighted average interest rate on refinancing operations in February amounted to 17.2% per annum, including on overnight credits - 18.0% on loans for tenders for liquidity support of banks - 22.6%, direct REPO transactions with government Ukrainian bonds and bonds of the State Mortgage Institution - 22.1%, other short-term loans - 15.9%. Interest rate policy of the National Bank in February continued to be directed at increasing the value of money to create incentives for the return of deposits in the banking system. According to the decision of the Board National Bank of Ukraine of 13.02.2009 № 72 as the base rates that determine the direction of monetary policy the National Bank uses interest rates on loans and refinancing operations to raise funds for a period of 14 days, which are determined on the basis of weekly tenders. When in December 2008, the average rate on these transactions amounted to 18.7% in February 2009 - 22.6% (January refinancing tenders were not conducted due to lack of approved in accordance with Art. 86 of the Law of Ukraine "On State Budget of Ukraine for 2009 "of the order of refinancing operations). Upon the resumption of January 30 refinancing operations of the banks, the rates on overnight loans was set at 16% (under the provision of government securities) and 17% (without collateral). This level of interest rates was established based on the projected rate of inflation by the IMF mission in 2009 to 16%. On February 17, 2009 they were increased to 18% and 20% per annum respectively. Category: Banking System