NBS moves to increase interbank liquidity

The National Bank of Slovakia (NBS) moved on June 25 to increase liquidity on the interbank money market, calling for the country's reference banks - the eight largest Slovak market players - to resume quoting obligatory volumes.
"We expect the reference banks to resume [quoting obligatory volumes] in July, following the agreement on obligatory quoted volumes and spreads," said Peter Andresič, head of the NBS's Open Market Operations Department.
The NBS has sharply reduced market liquidity to fight downward pressure on the Slovak crown over the past month by ceasing to hold its daily repo operations often used by banks for liquidity. The central bank eventually won the battle for currency stability, but the liquidity squeeze has virtually paralyzed trading in crowns.

The National Bank of Slovakia (NBS) moved on June 25 to increase liquidity on the interbank money market, calling for the country's reference banks - the eight largest Slovak market players - to resume quoting obligatory volumes. "We expect the reference banks to resume [quoting obligatory volumes] in July, following the agreement on obligatory quoted volumes and spreads," said Peter Andresič, head of the NBS's Open Market Operations Department.

The NBS has sharply reduced market liquidity to fight downward pressure on the Slovak crown over the past month by ceasing to hold its daily repo operations often used by banks for liquidity. The central bank eventually won the battle for currency stability, but the liquidity squeeze has virtually paralyzed trading in crowns.

Under the reference bank agreement, the eight banks are obliged to quote prices on up to 100 million Sk funds with a maturity of up to one month, up to 50 million Sk funds with a maturity of up to three months, and up to 25 million Sk funds with up to six months. The NBS expects quoted volumes to be smaller and spreads wider when the reference banks' agreement is valid again, Andresič said.

He continued that he expected higher liquidity to bring livelier trading to the local money market in July, once the reference bank system is back in place. He added that rates on the interbank market should edge higher in the first days of more liquid trading than they were before the attack on the crown.

"The rates are likely to be higher than they were before banks stopped quoting the Bratislava Interbank Offered Rate (BRIBOR) one month ago," Andresič said.

Banks last quoted BRIBOR on May 21, when overnight funds traded between 21 and 22 percent, one-week funds between 25.2 and 25.7 percent and three-month money at 21 to 22 percent. In early Tuesday trading, interbank rates funds hovered between 16.5 and 18 percent for most maturities.

Get daily Slovak news directly to your inbox

Top stories

News digest: Health care staff still lacking, president asks for amends

Slovakia is preparing to launch the nationwide testing on Saturday morning, but the government admitted they still need hundreds of health care staff. Kotleba violates quarantine and hospitals in the north are full.

The Bratislava Self-Governing Region started testing its staff on October 30.

Testing is impossible to carry out as planned, president says

President Zuzana Čaputová asked the government to reconsider measures for people who do not get tested, many will not get a chance.

President Zuzana Čaputová met with the representatives of the armed forces.

The big test is upon us. What are we to do?

For a foreigner living in Slovakia, there is yet another concern.

Health care professionals still lacking ahead of Saturday's testing

Government avoids mobilisation for now, PM offers an extra bonus to health care professionals who can serve the whole weekend.

Dolný Kubín