Bank of Russia to increase required reserve ratios from August

Amid a growing structural liquidity surplus, a gradual normalisation of the situation in the financial market, and in order to maintain the downward trend in the share of foreign currency on credit institutions’ balance sheets, the Bank of Russia has increased the required reserve ratios:

— by 1 pp to 3% for all categories of reservable liabilities in the currency of the Russian Federation for banks with a universal licence and non-bank credit institutions;

— by 1 pp for banks with a universal licence and banks with a basic licence and by 3 pp for non-bank credit institutions to 5% for all categories of reservable liabilities in foreign currency.

The new ratios will apply starting from regulating the amount of required reserves for August 2022.

Required reserve ratios for all categories of reservable liabilities in the currency of the Russian Federation for banks with a basic licence remain unchanged.

According to required reserves averaging periods in 2022, the regulation of the amount of required reserves for August 2022 does not involve the recalculation of the required reserves deposited in required reserves accounts. Hence, as a result of the rise in the required ratios, the overall amount of required reserves will increase only due to the growth of their part that shall be maintained in correspondent accounts within the framework of the averaging mechanism, whereas the amount of required reserves in required reserves accounts will remain the same.

With regard to the expected growth of the structural liquidity surplus, the Bank of Russia plans to continue gradually increasing the required reserve ratios for all categories of reservable liabilities in the currency of the Russian Federation for banks with a universal licence and non-bank credit institutions, and for all categories of reservable liabilities in foreign currency for all credit institutions:

— approximately to 4% and 7%, respectively, starting from the regulation of the amount of credit institutions' required reserves for January 2023;

— approximately to 5% and 8%, respectively, starting from the regulation of the amount of credit institutions' required reserves for June 2023.

Other required reserve ratios for all categories of reservable liabilities in the currency of the Russian Federation for banks with a basic licence are expected to remain unchanged.

Information on the amount of the required reserve ratios, which will be set in 2023, and the time of their application will be provided additionally.

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