The National Bank of Ukraine is updating the list of benchmark domestic government debt securities (benchmark bonds) that the banks have been allowed to use to partially meet the reserve requirements. More specifically, from 12 April 2025:
- the domestic government debt securities identified as ISIN UA4000227185 will be excluded from the list of benchmark bonds, given their scheduled redemption is to be completed on 2 April 2025, and
- the domestic government debt securities identified as (ISIN) UA4000234934, which were first placed by the Ministry of Finance of Ukraine on 1 April 2025, will be added to the benchmark bonds list.
This measure is intended to stimulate banks’ activity at Ministry of Finance’s auctions to place domestic government debt securities, which is essential for ensuring that the state budget is financed without resorting to monetary financing.
As previously reported, the banks have been able to use the securities on the benchmark bonds list to meet up to 60% of the reserve requirements. The benchmark bonds list is made by the NBU based on the proposals of the Ministry of Finance of Ukraine.
From 12 April 2025, it will include 17 issues of securities, namely: UA4000227102, UA4000227193, UA4000227201, UA4000227490, UA4000228043, UA4000228381, UA4000228811 UA4000229116, UA4000232177, UA4000232607, UA4000232615, UA4000232896, UA4000232912, UA4000233613, UA4000234140, UA4000234553 and the new UA4000234934.
The updated list of benchmark bonds the banks have been allowed to use to meet in part the reserve requirement was approved by NBU Board Decision No. 129 On Amendments to NBU Board Decision No. 752 dated 23 November 2017 dated 11 April 2025, to be enacted on 12 April 2025.
Reserve requirements are one of the instruments conventionally used by central banks. This is how reserve requirements operate: a bank sets aside in its correspondent account with the central bank an amount of funds identified as a percentage of the bank’s liabilities (also known as reserve ratio) and marks a share of this percentage as having been covered by benchmark bonds.
The amount is calculated as an average over the reserve period. This allows the bank to smooth out potential ad-hoc fluctuations in liquidity and ensure the effective use of reserve requirements for their primary purpose, which is to absorb some of the banking system’s free liquidity.
Full information on the amount of reserve requirements formed by banks is available here.