The Central Bank makes repo operations more flexible

On April 15 the Bank of Russia began to conduct over-the-counter repo operations which were announced last year.

According to the Central Bank of Russia, these repo operations differ largely from repo operations conducted by the Bank of Russia in the following:
  • Closing transactions based on the Bloomberg information system; 
  • Closing repo transactions against a general-collateral included into the Bank of Russia’s Lombard List, and a possibility to replace the collateral within a repo period, thereby allowing foreign securities, which are not listed in the Russian exchange market, to be used for repo transactions with a maturity more than one day, as well as substantially expending opportunities to manage a portfolio of securities.

Thus, the innovation widen choices for Russian banks to borrow from the Central Bank of Russia and make such fundraising mechanism more flexible. It is to be recalled that after the crisis of 2008–2009 the Bank of Russia refinancing operations (above all, repo operations) became the principal channel for extending money supply in Russia. Refinancing volumes grow against gradual decrease in the volume of available collateral against which additional fundraising can be made, in which case increased flexibility of repo operations will allow the Central Bank of Russia to further increase loans to the banking system by increasing the monetary base in the Russian Federation.   

Trunin P.V. – Ph.D. in Economics, Head of Monetary Policy Department