The National Bank believes that there is no need to stimulate banks to increase investments in domestic government loan bonds (DGLB). The NBU reported this in response to an EP request.
►Subscribe to the “Minfina” page on Facebook: main financial news
In particular, they recalled that in January 2023 they had already introduced the possibility of banks covering required reserves through benchmark government bonds. However, starting from mid-February of this year, the Ministry of Finance has not placed this type of government bonds at all.
“So far, there is no need for such stimulation, the demand for government bonds remains stable due to attractive market rates,” the National Bank emphasizes.
According to the regulator’s calculations, as of July 15, banks owned 43% of all government-issued government bonds in circulation.
“The fair value of government bonds in banks’ portfolios, excluding formed reserves, is about UAH 786 billion (763 billion UAH reduced by formed reserves) and, accordingly, constitutes about a quarter of the net assets of the banking system,” the NBU notes.
At the same time, the National Bank does not see risks in the fact that banks concentrate such significant volumes of their assets in one instrument and believe that this does not threaten the stability of the system.
“It depends on the business model and risk profile of each individual bank. We can only say that now the system has the ability to safely increase the volume of investments in government bonds,” the regulator adds.
According to NBU estimates, this year banks will invest UAH 570 billion in government government bonds (in hryvnia equivalent ), which corresponds to the volume of investments in 2023 (UAH 566 billion). Currently, the government has already attracted UAH 273 billion from banks.
- NBU OVDP Bonds Banks