OREANDA-NEWS. Russian banking sector is under transition to structural liquidity surplus, that is, to the situation when banks are interested in placing excess liquidity with the Bank of Russia. In this context, one-week deposit auctions, conducted according to the confirmed operations schedule, will become the regulator’s main operations in 2017.

The change in banking sector liquidity is caused by the budgetary funds inflows to commercial banks through expenditure financing by Reserve Fund resources. Bank of Russia forecasts assume that the surplus might last for a long time.

‘The Bank of Russia will continue to effectively steer money market rates, as our auction-based operations create a benchmark for funds placement and borrowings by banks under any liquidity situation,’ said Director of the Bank of Russia Monetary Policy Department Igor Dmitriev. ‘Given liquidity surplus, we will mostly carry out deposit operations. In case short-term liquidity deficit occurs and the need to conduct a one-week repo auction instead of a deposit auction arises, the information will be published on the Bank of Russia website the day before the auction’.