Банківська система україни в умовах глобалізації фінансових ринків
Repurchase agreements as an instrument of monetary policy in ukraine
Vysochynska o.v., larionova k.l., ruda n.s.
Khmelnytsky national university
В даній статті дається характеристика операцій репо і їх значення для проведення грошово- кредитної політики нбу. Обґрунтовано важливість операцій прямого і зворотного репо для регулювання ліквідності в банківській системі.
Necessity of research. Modern financial markets can be hardly imagined without repo transactions, which have become its essential part during the last ten years. Nowadays repo markets are not only one of the biggest and most developed international financial market segment, but also an extremely important mechanism of their stabilization and integration into a single financial space. Furthermore, repurchase agreement is a main market instrument, which helps central banks and financial market's participants to achieve understanding.
In ukraine repo transactions are not widespread.
Analysis of last issues. Study of the literary source shows that many economists have analised questions connected with banking transactions, especially repo transactions. Possibility of using repurchase agreements in a monetary policy was considered in works of such economists as m. Fisher, m.j. fleming, k.d. garbade, s.a. lumpkin, g. Oksenoit and others. Ukrainian economists shall turn to a foreign experiment for setting up a base for a successful use of these transactions in ukraine.
The aim of this article is to give a definition of a repurchase agreement and to emphasize its role as an important instrument of monetary policy in ukraine.
Statement of the main material. Repurchase agreement (repo) is a financial instrument used in the money markets and capital markets. A more accurate and descriptive term is sale and repurchase agreement.
A repo is a written agreement that provides for a "sale" and "repurchase" of a security or securities (the underlying securities, or the collateral). The purchaser agrees to purchase the underlying securities at a specific price and the seller, or "counterparty", agrees to repurchase the same securities on a specific date for a specified price, plus an additional amount that reflects the time value of the purchaser's investment from the date of purchase of the underlying securities to the date of their repurchase by the seller.
A repo consists of two legs or transactions. The start leg of the repo consists of the repo party transferring securities to and receiving funds from the reverse party; and the close leg consists of the reverse party transferring securities to and receiving principal and interest from the repo party. Based on these characteristics, repos are considered loans collateralized by government securities [4].
The rate of interest to be paid on a repo loan is a repo rate.
According to an international practice a category of repurchase agreements includes:
a) Repo transactions - repo and reverse repo;
b) Transactions of selling with a back redemption (redemption with a back selling) - sell/buy backs (buy/sell
Backs);
c) Transactions of counter-crediting by securities and funds or crediting against securities - collateralized lending/loans (combination of securities lending with a cash lending or cash lending against a pledged securities loan).
A general characteristic of all these transactions is a transfer of securities in exchange for getting money assets with a reverse interchange of assets between counteragents after a fixed period. Only legal forms of realization of these transactions are different. In first two cases it is a transaction of purchase and sale of securities (with a concomitant passing of property on securities from a seller to a buyer).
In the last case there are two counter transactions of loan (on money and securities) or a transaction of funds advance against securities (in this case a creditor's disposal of pledged securities, as a rule, is appreciably restricted because of passing property absence). A choice of a legal form of repo process is determined by a specific character of national laws.
From an economical point of view all transactions listed above are varieties of collateralized credits: money credits under guarantee of securities or credits on securities under security of money assets. Namely, the property of security defines that important role, which repo transactions play among instruments of monetary policy and in the structure of international financial markets as a whole. Government securities are the basic assets for repo transactions [1, p.21-22].
A reverse repo is simply a repurchase agreement as described from the cash provider's perspective, as the cash provider is not the repurchasing party, but the reverse i.e. The party from whom the security is repurchased. Hence, the cash receiver executing the transaction would describe it as a "repo", while the cash provider in the same transaction would describe themselves as executing a "reverse repo". So "repo" and "reverse repo" are exactly the same kind of transaction, just described from opposite viewpoints. The schemes of these transactions are shown on the picture 1.
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A repo Collateral |
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A reverse repo Collateral |
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At inception: |
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Dealer |
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Customer |
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Dealer |
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Customer |
At inception:
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Funds |
Funds
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Collateral |
Collateral
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At maturity: |
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Dealer
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