In Ukraine, the problem of influence on the liquidity of the banking system

Treasury Single Account of the Government is unpredictable and difficult-predictable flow of funds to them. In addition, because of imperfections in the budget process there is a tendency for accumulation of funds for the year with a massive CEN their spending in certain periods, mainly at the end of the year, leading to increased risk of banking system liquidity. This is due to active accumulation of funds in the accounts of the Government in the National Bank of Ukraine for the receipt of payments in the budget, which affects the withdrawal of funds from the market and reducing liquidity. At the massive spending increases the amount of current accounts (correspondent accounts) banks at the central bank and leads to a sharp increase in bank liquidity. In the future this policy causes an increase in the amount of cash outside banks, which means transforming government accounts payable to the public in the form of wages and social transfers and, consequently, affects the reduction of liquidity in the banking system. Such fiscal policy leads to imbalance in the monetary market and social orientation of the budget is a factor of macroeconomic imbalances, which is a manifestation of the excess growth of domestic demand over supply, but the result - inflation in the country. Category: Liquidity of the banking system of Ukraine