|Date of rate||RUONIA, %||
Transactions volume included in the RUONIA calculation,
|Date of publication|
RUONIA (Ruble Overnight Index Average) is a weighted average interest rate on overnight interbank ruble loans (deposits) that reflects the estimated value of unsecured overnight borrowing. RUONIA is calculated based on the information from major banks’ statements prepared according to Form 0409701 ‘Report on Transactions in Foreign Exchange and Money Markets’ submitted by credit institutions to the Bank of Russia pursuant to Bank of Russia Ordinance No.
RUONIA is a risk-free interest rate benchmark used to monitor and analyse the efficiently of pursuing the operational objective of the Bank of Russia’s monetary policy. RUONIA is a benchmark rate used in the pricing of a number of financial instruments, including loans, bonds, and derivatives.
In 2020, the Bank of Russia and SRO NFA approved the decision assigning the RUONIA administration to the Bank of Russia. According to the new agreement, the Bank of Russia is in charge of the RUONIA methodology, data collection, the calculation and publication of this interest rate, while SRO NFA is responsible for arranging expert discussions and preparing opinions on the methodology, monitoring the RUONIA quality and critical situations, and considering complaints and requests from RUONIA users.
The administration of RUONIA by the Bank of Russia fixes three issues:
- Compliance of RUONIA with the Principles for Financial Benchmarks of the International Organization of Securities Commissions (IOSCO).
- Minimum-cost adjustment of RUONIA to the (EU Benchmark Regulation, EU BMR, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32016R1011).
- Full operational continuity of RUONIA.
In order to control the compliance with the international requirements, the Bank of Russia establishes the Committee for RUONIA Supervision in its structure that will also include SRO NFA’s representatives. The SRO NFA’s Expert Council on Indicators and Rates will act as the committee of RUONIA users.
RUONIA was developed by the Bank of Russia jointly with the National Foreign Exchange Association in 2010 to meet the need for up-to-date information on the situation in the ruble money market in the course of the
Until 2020, RUONIA was administered by the self-regulatory organisation National Finance Association (SRO NFA) (until 2015, by the National Foreign Exchange Association that in 2015 merged into SRO NFA). The Bank of Russia acted as the calculation agent and published the rate.
RUONIA in the Bank of Russia’s monetary policy
Money market interest rates, including RUONIA, are important indicators characterising the transmission mechanism of monetary policies of inflation-targeting central banks. Managing banking sector liquidity, central banks are striving to keep money market rates close to the interest rate of the central bank (the key rate). If market rates stay steadily close to the key rate, this makes the stance of monetary policy clearer, increases the predictability for market participants to manage their own liquidity, and ultimately improves the performance of the entire interest rate channel of the monetary transmission mechanism.
The Bank of Russia analyses the situation in the money market on a daily basis, using, among other sources, the information on the RUONIA level and its deviation from the key rate.
Global reform of interest rate benchmarks
After manipulations of the mechanism for establishing the indicative interest rate LIBOR had been revealed, the G20 member states made the decision to modify the fundamentals of the pricing in the financial market. The reform launched in 2014 involved the revision of the methodology for forming benchmark interest rates in reserve currencies and the implementation of the specialised regulation of benchmark administrators’ activity. In the course of the reform, markets largely abandoned indicative rates opting for interest rates on actual transactions. As a result, LIBOR rates have been replaced by new national risk-free interest rates administered by central banks, specialised index companies, information analysis agencies, and exchanges.