On new approaches for averaging credit institutions’ required reserves

The Bank of Russia Board of Directors has approved Bank of Russia Regulation No. 507-P, dated 1 December 2015, ‘On the Required Reserves for Credit Institutions’ to implement the earlier decisions on new approaches for required reserves averaging.

Starting 2016, the required reserves averaging schedule will be synchronised with the schedule of one-week auctions — Bank of Russia basic liquidity regulation operations. At the same time, the required reserves averaging periods will be a multiple of 4-5 weeks. Calculations of the average correspondent account and subaccount balances of credit institutions in the Bank of Russia will be made by the arithmetic mean (rather than the current chronological average) formula to check their progress with required reserves averaging.

The said amendments are aimed at creating a steadier credit institutions’ demand for the funds on Bank of Russia correspondent accounts within the required reserves averaging period. Besides, these measures will add to the reduction of volatility of the money market rates in individual periods when the settlement date for Bank of Russia basic operations is at odds with the required reserves averaging end date.

The Bank of Russia Board of Directors has approved the required reserves averaging schedule for 2016 which is available on Bank of Russia website. From now on, the required reserves averaging schedule will be approved on an annual basis and published by the Bank of Russia.

Bank of Russia Regulation No. 507-P, dated 1 December 2015, ‘On the Required Reserves for Credit Institutions’ is subject to state registration by the Ministry of Justice of the Russian Federation. It will be effective on 1 January 2016 and will be used starting the credit institutions’ required reserves scale calculation over the reporting period from 1 January through 1 February 2016. Calculation of the average balance of funds on correspondent accounts and subaccounts of credit institutions in the Bank of Russia in order to check their progress with required reserves averaging will be made by the arithmetic mean formula starting from the averaging period from 10 January through 10 February 2016.

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