About the auctions for provision of loans, secured by non-marketable assets and guarantees, for 12 months term with floating interest rate (Unofficial translation)

The Bank of Russia External and Public Relations Department informs that starting from 15 July 2013 the system of the Bank of Russia monetary policy instruments is expanded with the auction for provision of loans, secured by non-marketable assets and guarantees, according to the Regulation No. 312-P dated November 12, 2007 “On provision of loans secured by non-marketable assets and guarantees by the Bank of Russia to credit institutions” for 12 months term with floating interest rate. The minimum interest rate on the auction is set at the level of 5.75% according to the Board of Directors of the Bank of Russia decision taken on the 12 July 2013.

The minimum interest rate on the auctions, which is set by the Board of Directors of the Bank of Russia, is linked to the level of the minimum interest rate on the main Bank of Russia liquidity provision auction operations for 1 week term. If the Board of Directors of the Bank of Russia takes decision about the change of the minimum interest rate on the main auction operations, the interest rate for the loans provided previously on the credit auctions will be adjusted, for the period starting the date after the decision, by the amount of the change of the level of the minimum interest rate on the main Bank of Russia liquidity provision auction operations for 1 week term.

The conduct of the longer-term operations with floating rate will contribute to intensifying the monetary policy signal as the changes in interest rates will be transmitted to the change of the cost of funds, previously provided by the Bank of Russia to credit institutions. In addition, the use of this instrument by the credit institutions will contribute to the decrease of the market collateral, currently held by the Bank of Russia, improving the interbank market efficiency. Thus, the implemented decision is aimed at the improvement of the interest rate management and will contribute to strengthening the interest rate channel of the monetary policy transmission mechanism.

Since the auctions for provision of loans, secured by non-marketable assets and guarantees, for 12 months term should be regarded as part of the Bank of Russia’s overall interest rate instruments system, results of the allotment of liquidity through these operations will be taken into account while setting the parameters of the main Bank of Russia liquidity provision auction operations (according to the methodology presented on the official site of the Bank of Russia).

On 29 July 2013 the Bank of Russia sets the auction for provision of loans, secured by non-marketable assets and guarantees, for 12 months term with floating interest rate with the following parameters:

Auction type: Dutch auction;

Maximum allotment: 500 000 000 000 (five hundred billion) roubles;

Minimum interest rate: 5.75 (five point seventy five) percent per annum;

Minimum bid: 25 000 000 (twenty five million) roubles;

Maximum allotment for a single credit institution is set as the amount of the credit institution’s own funds (capital) as on the last reporting date times one.

The auction schedule:

Decisions on further credit auctions will be considered additionally.

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