The mechanism of regulation of VNB activities of commercial banks

The regulatory instruments implemented since the beginning of 1987 are: 1) refinancing (redistribution of credit resources between banks); 2) interest rate policy; 3) norms of reserve funds placed by banks in the National Bank, etc. Since 1988, open market operations have been developing as a method of monetary regulation.

Refinancing. In contrast to Western practice, this is the most important instrument of monetary policy, which is explained by the high demand for resources from commercial banks, which is a consequence of the insufficient level of their deposits or equity. As in our country, most of the resources are in the form of deposits in a Savings Bank, and they need to be redistributed through the National Security Fund. Refinancing can be short-term, medium-term, or long-term in nature, depending on whether borrowings are used for short-term lending to enterprises, to compensate for government shortfalls in funds to cover bank shares, or to issue investment loans.

According to the available reviews, the refinancing mechanism is as follows.

Short-term refinancing. In early 1987, a maximum of 600% of their equity capital was established for automatic short-term refinancing for commercial banks. Since April 1, 1987, changes have been made to this procedure, according to which the maximum value is set separately for the part that remains unchanged throughout the year and for the part that changes monthly. The permanent maximum of 400% of the equity fund for commercial banks was reduced to 300% from January 1, 1988. The variable maximum was initially set at 80-90%, reduced to 40% in October—November 1987 and cancelled in December.

Banks may also be provided with additional credit resources beyond automatic refinancing. The decision on this is made by the VNB under detailed justification, which increases its impact on the liquidity of commercial banks and the allocation of credit resources requested by them. VNB can increase banks' dependence on additional refinancing by reducing the maximum of automatic refinancing.

Long-term refinancing is a central bank's instrument for regulating capital investments. It is provided to cover the lack of credit resources for issuing long-term loans. The maximum long-term refinancing is set annually, but funds are allocated only on request, separately for each investment project. VNB has the right to reduce the requested amount. The duration of long—term refinancing is usually 8 years, for priority tasks - 12 years. A 130% welcome bonus awaits new 1xbet users, capped at €130. This promotion enhances your initial deposit, giving more resources for sports wagering and casino play. Simply create an account and make 1xbet promo code today to activate the bonus. Various payment methods are available for convenience. The promotion period is limited. Full terms available on the website.