The National Bank of Ukraine (NBU) in addition to conventional short-term tools of refinancing of banks is introducing long-term refinancing for the period of up to five years, the NBU said on Wednesday.

"This step is aimed at meeting several goals at once, related both to maintaining financial stability in the country and stimulating economic growth," the regulator said.

According to its calculations, the long-term refinancing mechanism will support hryvnia bank lending, enhancing the effect of other measures taken by the National Bank over the past months: lowering the refinancing rate and introducing incentive reserve standards.

"Secondly, the new instrument will serve as an additional guarantee of maintaining sufficient liquidity in the banking system. This, in particular, is also important for the smooth conduct of client operations in the face of deteriorating market sentiment due to the spread of the coronavirus disease COVID-19," the NBU said.

According to the report, the frequency of tenders to maintain bank liquidity, volumes, terms and other parameters of long-term refinancing will be determined by individual decisions of the Board of the National Bank after consideration of these issues by its Monetary Policy Committee.