Budapest, September 27, 2022. Based on the previous decisions of the Monetary Council, the MNB's liquidity-absorbing measures will start in October. As a result of the amendments of the minimum reserve requirement system, the monthly average volume of banking system liquidity sterilized by the MNB in the reserve accounts will rise from the level of 400 billion forints in September to close to 2,700 billion forints.
Following the previous decisions of the Monetary Council, the MNB's liquidity-absorbing measures will begin in October, including the transformation of the reserve requirement system with the introduction of the 5 percent daily minimum value and the optional rate. The period for choosing the optional reserve ratio for the next quarter, starting on October 1, 2022, was closed on September 19. Most credit institutions chose the option of 6 percent among the available reserve ratios, but several credit institutions also used the option of the maximum reserve ratio of 10 percent. With the increase of the minimum level of the mandatory reserve ratio to 5 percent and the introduction of the optional rate, following the decision of the credit institutions, in the fourth quarter of 2022, the average monthly volume of banking system liquidity sterilized by the MNB in the reserve accounts will rise from the current level of HUF 400 billion to close to HUF 2,700 billion.
Several instruments of the MNB applied at the end of the third quarter of 2022 will expire on October 6, and the new liquidity-absorbing measures will start in accordance with this timing. Thus, in order to ensure the transition to the new minimum reserve requirement system and to support bank liquidity management, based on the decision of the Monetary Council, the MNB temporarily, from 1 to 5 October, in the case of all credit institutions subject to reserve requirements, the requirement to meet the 5 percent reserve requirement on a daily basis is generally waived. The MNB grants the exemption to all credit institutions subject to reserve requirements even without the credit institution's individual request.
From the beginning of October, the interest paid on excess reserves will also change, its new rate is the same as the overnight deposit interest rate.
In accordance with the previous decisions of the Monetary Council, from October 2022, the variable rate long-term liquidity absorbing deposit will be announced, and the central bank discount bill will be available in the framework of regular auctions. The central bank's new deposit-side instruments tighten monetary conditions by reducing liquidity, thereby supporting the achievement and maintenance of price stability. The Notice for the long term liquidity absorbing deposit is available here, while the information sheet for the Discount Bill is available here.