Compulsory reserve norm on deposits with period more than 1 year increased to 10% from February 1

Pursuant to the information given to APA from the National Bank, as far back as 2003 the central bank reduced the compulsory reserve norm on deposits with a period more than 1 year from 10% to 0%.

The key objective of this decision was expansion of financial sources of long-term credit investments in the economy. The analysis conducted during the last two years shows that application of this decision gave some impetus to the growth of long-term credits and share of long-term credits in credit investments increased to 10%.

However, the growth of long-term deposits which are the main source of long-term credit investments happens mainly at the expense of significant increase of propensity to save and expansion of other alternative financial sources of credit investments. In this situation the influence of release from the compulsory reserve norm upon the growth speed of long-term credit investments began decreasing.

"At the same time, the predictions that significant economic growth will happen in the country in 2006, particularly sharp increase of oil income and starting utilization of these income will lead to further enhancement of long-term financial sources in the economy. These factors create conditions for serious increase of money supply and long-term credit expansion. These processes require certain reinforcement of the monetary control function of the compulsory reserve norm," stressed in NBA. Taking all these into consideration, the NBA Board adopted the decision as far back as December of the past year on re-application of the practice of attracting deposits with the period of more than 1 year to compulsory reserve from February 1.