Banks in Ukrainу Gain Easier Access to the Rollover Mechanism
OREANDA-NEWS. The National Bank of Ukraine has expanded the list of eligible collateral to enable the use of the rollover mechanism to further sharpen liquidity management instruments in the banking system. As a side note, in February 2016, the NBU provided banks with an opportunity to use a rollover mechanism allowing the disbursement of a loan to a bank to enable the latter to repay refinancing and overnight loans.
The respective resolution allows banks to pledge Ukrainian government loans and NBU certificates of deposit to have their loans rolled over or refinanced. In view of the above, the NBU allowed NBU certificates of deposit to qualify as eligible collateral in the revised Regulation on the Rules Governing the Accounting of NBU Certificates of Deposit and the Execution of Transactions in These Financial Instruments by the NBU and Banks. NBU Board Resolution No. 230 On Approval of Amendments to the Regulation on the Rules Governing the Accounting of NBU Certificates of Deposit and the Execution of Transactions in These Financial Instruments by the NBU and Banks was issued to this effect. These amendments shall take effect on 6 April 2016.
At the same time, the need has emerged to expand the list of eligible collateral used in rollover operations to include foreign currency deposited in accounts with the NBU as a security deposit. NBU Board Resolution No. 237, dated 5 April 2016, On Amendments to the Regulation on the Us by the National Bank of Ukraine of Standard Instruments for Regulating Liquidity in the Banking System was issued to this effect. This resolution will come into force on 18 April 2016.
These resolutions will enable banks to meet their short-term liquidity needs through the use of the rollover mechanism and allow banks to pledge as collateral not only domestic sovereign bonds but also NBU certificates and foreign currency.