Monetary policy: The NBU further reduces the discount and reserve requirement rates

Banking system

Banking system of Ukraine consists of two levels - the National Bank of Ukraine at the higher level and commercial banks at the lower level. The National Bank of Ukraine activity is aimed at forming the system of finance and credit of the state and controlling the credit system lower level section activity. Lower level section activity is aimed at available resources mobilization and their employment in crediting and investing subjects of management as well as getting profits and capital accumulation in order to refund economy. Nowadays there are 227 commercial banks in Ukraine, two of them are state banks (Savings Bank and Ukreximbank) and twenty banks with the attraction of foreign capital (seven of which have 100% share). At the background of finance and money stabilization the money reform was successfully carried out in 1996 - the own money unit - Ukrainian hrivna - was put into circulation. Stability of national money laid the foundation of positive changes in economy, having provided the proper financial conditions, stable criteria, which must interest investors. Long-term credits of banking system are growing.

VIII. Read and discuss the following texts:

In order to stimulate long-term crediting, including investment projects, the NBU increased the period of commercial bank refinancing from 180 to 270 days. Moreover, on July 5 the discount rate was further reduced from 10% to 8% p.a. These measures stimulated a demand for NBU refinancing funds, and in July the total amount of commercial bank refinancing through quantity tenders reached UAH 315.1 m compared to UAH 7.1 m in June. However, the quantitative significance of this instrument of monetary policy remains low.

On July 8 the reserve requirements were further reduced. The NBU set the reserve rate for demand deposits in national currency to 10% and to 12% for foreign ones. The NBU also reduced the requirements on time deposits in foreign currency to 8-10%. Still, the reserve requirements on national currency deposits are much lower, creating for these deposits more favourable conditions. Currently the share of deposits in foreign currency constitutes approximately one third of total deposits, having steadily reduced from the maximum of 45% in January 2000.

The July consumer prices maintained a downward-sloping dynamic: inflation was -0.9% yoy, despite a fairly high growth of the monetary base (47.2% yoy). The Ministry of Economy and European Integration revised its inflation forecast from 9.8% down to 3.5 to 6.5% yoy depending on the municipal tariff policy during the rest of the year.

Дата добавления: 2014-12-29