Banking. Credit auctions: essence, order of organization, significance (lecture notes)

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Banking. Credit auctions: essence, order of organization, significance (lecture notes)

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Credit auctions: essence, order of organization, meaning

The essence of the participation of commercial banks in credit auctions is their receipt of MARGIN, i.e., the difference between the price of acquiring resources and their further resale in the form of a loan to customers. Only head offices of banks that comply with all the necessary requirements of the Central Bank are allowed to participate in credit auctions held by the Central Bank of the Russian Federation. The Central Bank of the Russian Federation allows various ways of organizing auction sales - according to the American method, the Dutch method and with a fixed interest rate.

RџSЂRё American way Applications of participating banks are ranked by the level of the offered interest rate in descending order, and then satisfied in the same order, starting from the maximum offered interest rate until the total amount of credit established at this auction is exhausted. As a result, the amount of the last of the satisfied applications may be reduced.

RџSЂRё Dutch way all applications are satisfied at the cut-off price - the minimum rate offered by banks that have fallen into the circle of buyers.

In the case of fixed rate auction all bids are satisfied, however, if the total amount of these bids exceeds the volume of the loan offered for the auction, all bids are partially satisfied. The degree of satisfaction of applications corresponds to the ratio of the total volume of the auction credit to their total amount.

By holding credit auctions, the Central Bank of the Russian Federation democratized the process of distributing centralized credit resources, providing an opportunity for all commercial banks that meet the established requirements to become buyers of the auction credit. At the same time, the Central Bank of the Russian Federation received an instrument that determines the ratio of supply and demand for funds in the banking system and their "value". An analysis of the situation on the market of credit resources that has developed following the results of the auction makes it possible to reasonably adjust the discount rate of the Central Bank of the Russian Federation, the conditions for holding subsequent auctions and the need to maneuver with other instruments of monetary regulation.

Author: Shevchuk D.A.

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