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Ukrainian regulator tweaks reserve requirements for local banks

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Ukrainian regulator tweaks reserve requirements for local banks

The Ukrainian central bank decided to change the approach to reserve requirements for banks, differentiating the required reserve ratios depending on the currency of bank deposits rather than their maturity, as is currently the case.

Starting from March 10, 2020, a reserve ratio of zero percent will be applied to hryvnia deposits, while the required ratio on foreign-currency deposits will amount to 10%, the National Bank of Ukraine said Dec. 12.

At the moment, a reserve ratio of 3% is required for corporate and retail fixed-term deposits in both hryvnia and foreign currencies, while a ratio of 6.5% is applied to funds in current accounts.

The new approach is expected to help reduce dollarization of deposits in the Ukrainian banking sector and lower interest rates on loans to households and businesses. At the same time, postponing the introduction of the new ratios until March will give banks time to adjust their policies to the new rules, the Ukrainian regulator noted.