NBU Council names possible threats to hryvnia stability

"The liquidity of the banking system remains at an unprecedentedly high level, while banks are investing in the National Bank's deposit certificates and government securities... The government has accumulated historically high balances on the Treasury account with the National Bank. Local budgets continue to be placed in bank deposits instead of being invested in the real sector of the economy," the report says.

The Council notes that such liquidity volumes indicate the formation of a "monetary overhang," which is concentrated in the banking system and the public sector.

"Given the current state of the monetary market, government spending in a short period of time, traditional at year-ends, could bear more significant risks to the stability of Ukraine's monetary unit [hryvnia] than in previous years," the report said.

Read alsoSolvent banks in Ukraine make UAH 1.4 bln since year-startThe NBU Council also notes the need to monitor the state of the monetary and foreign exchange markets, the liquidity of the banking system and its major impact factors, as well as the need to strengthen the coordination of monetary and budgetary policies in order to prevent a sharp increase in the supply of funds and growing inflationary risks.

As UNIAN reported earlier, the national currency of Ukraine (hryvnia) was devalued by 1.3% against the U.S. dollar for the month, as of October 30.