The National Bank will withdraw 20 billion KGS from the banking system through short-term securities

Today, March 10, the National Bank of Kyrgyzstan will hold an auction for the placement of short-term notes with a maturity of 7 days. The total amount of the placement will be 20 billion KGS.

National Bank notes are one of the instruments of monetary policy. Through such operations, the regulator temporarily withdraws excess money from the banking system to curb inflation and maintain the stability of the national currency.

In fact, banks buy bills from the National Bank, placing their free liquidity in them, and a week later they get their funds back along with the income. The maximum yield on the placement will be tied to the National Bank's discount rate on the date of the auction. Today, it stands at 12%.

The issue of new notes is scheduled for March 11, and their redemption will take place on March 18.

We would like to add that as of March 9, National Bank notes worth 31 billion KGS are already in circulation. Of these:

• 20 billion KGS are short-term 7-day notes,
• 6.5 billion KGS are 91-day notes,
• 4.5 billion KGS are 182-day notes.

Thus, the bulk of the instruments are short-term (weekly) notes, which allow the regulator to respond quickly to changes in liquidity in the financial market.