The NBU wants to stop the “printing” of the hryvnia and encourages banks to invest in government bonds.

The National Bank of Ukraine has allowed banks to cover up to 50% of their required reserves through domestic state loan bonds (OVDP). The NBU believes that this step will contribute to more active bank participation in the primary OVDP market and, accordingly, to avoid emission financing of the budget deficit in 2023. As well, this maneuver will help the budget through the partial absorption of the banking system’s free liquidity. Thus, when forming reserves during the new retention period, which begins on January 11, 2023, banks can include benchmark OVDP bonds in their coverage of mandatory reserves. The Ministry of Finance first placed the relevant securities at the primary auction on January 3, 2023.