Also, the National Bank announced its readiness to reduce the discount rate
The National Bank of Ukraine approved the operation of interest rate swap operations on the interbank market. Thus, the regulator wants to introduce a new tool that will revive long-term bank lending. This was reported on the NBU website.
Vice President of NBU
What the percent swap suggests:
- One party offers the other a fixed interest rate, which accrues on a payable amount, and the other party offers a floating interest rate.
- The final rate will be calculated based on the Ukrainian index of interest rates on Ukrainian debt and overnight deposits (UBIR).
- Within the agreed time period, the parties calculate the difference in interest payments based on the amount of interest paid.
Thus, banks can reduce the interest rate risk while lending. They attract deposits for a shorter duration than long-term loans, so they risk because of the possibility of changes in borrowing costs, according to the NBU website.
NBU Press Services
According to the National Bank, the introduction of an interest rate swap will encourage the deployment of credit programs for business and the public, as well as contribute to further reduction in interest rates in the economy.
The new device will be fully ready for such operations after technical functionality and depository system. Tentatively, will launch In the second half of June 2020.
How the operations will be performed
- The National Bank will conduct interest rate swap operations through Bloomberg, Refinitive or any other modern software and hardware system that has the required functionality.
- Those banks that have previously concluded the relevant general contract with the NBU and have formed the necessary guarantee fund will be able to participate in the auction. The latter may include a domestic state loan and / or national or foreign currency bonds, which are held in national bank accounts without interest.
Specific parameters for conducting such an operation (their frequency, time, marginal rate, volume, etc.) will be approved by a separate decision of the NBU Board after the Monetary Policy Committee considers the issue.
The general conditions for the conduct of interest rate swap transactions are approved by NBU Board Regulation No. 67, which came into force on May 30, 2020.
Paypal magazine help
Earlier, National Bank published approaches to regulate the non-bank leasing market. In particular, the following are the main changes:
- The requirements for leaseholders working as financial companies or as legal entities with licenses for financial leasing will be integrated.
- Financing sources for financial companies will be explicitly regulated and expanded.
- In particular, the transparency requirements of companies for the preparation and disclosure of reporting will be enhanced.
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