What are Monetary policy operations?

Main operations of monetary policy

In order to achieve the goal of ensuring price stability and increase the efficiency of the interest rate channel of the transmission mechanism, the Central Bank conducts monetary policy operations.

Monetary operations are directed to the management of short-term interest rates by regulating the general liquidity of the banking system.

The Central bank carried out these operations on the basis of the interest corridor mechanism and ensure the formation of money market interest rates in a corridor of ± 2% compared to the policy rate.

The operational mechanism of monetary policy

of the Central Bank of the Republic of Uzbekistan

Objective	Instrument type	Instruments	Maturity and terms	Interest rate
Liquidity provision*	Auction-based operations	Weekly REPO auctions	7 days (every Monday) (11:00 - 11:30)	Key rate
		Weekly credit auctions collateralized by foreign currency	7 days (every Monday) (11:30 - 12:00)
		Weekly SWAP auctions**
		2-6 day fine-tuning REPO and foreign currency-collateralized credit auctions	Based on liquidity conditions
		2-6 day fine-tuning SWAP auctions**
	Standing facilities	Overnight REPO operations	Overnight (10:00 - 1 hour after the close of the banking day)	Key rate + 2%
		Overnight loans collateralized by foreign currency
		Overnight SWAP operations**
		Intraday credit	Within the day (9:00 - until the close of the banking day)	Interest-free
Liquidity absorption *	Standing facilities	Overnight deposit operations	Overnight (10:00 - 1 hour after the close of the banking day)	Key rate - 2%
	Auction-based operations	Weekly deposit auctions	7 days (every Thursday) (11:00 - 11:30)	Key rate
		2-6 day fine-tuning deposit auctions	Based on demand
		REPO auction	7 days (every Thursday***) (12:00 - 12:30)	Key rate (upper bound)
		Central Bank bonds	Up to 12 months (according to the schedule) (11:00 - 11:30)	Key rate up to + 2% (upper bound)

* The settlement time for all types of auction and overnight operations of the Central Bank is 10:00 a.m. on the designated day.

** Operations carried out when necessary.

*** If necessary, can be held on other working days.

Liquidity provision operations

1. REPO auctions – is a bilateral transaction in which the Central Bank buys securities from credit institutions and then sells them after a certain period of time at a predetermined price.

The central bank sets the repo rate - at the level of the policy rate - which is the price for the funds raised in a repo transaction. The subject of the purchase and sale is government securities and bonds of the Central Bank.

For details, see the Regulation "On the Procedure for Concluding and Executing Repo Transactions with State Securities of the Republic of Uzbekistan"

2. FX SWAP auctions – is a bilateral currency exchange transaction (spot transactions) with the condition to reverse the transaction after a certain time at a predetermined rate (forward transactions).

When calculating the forward rate, the policy rate of the central bank is used as the value of the national currency. The subject of the transaction is the foreign currency.

3. Overnight REPO and Overnight FX SWAP operations are standing facilities, one-day transactions at a rate of "policy rate + 2%".

Liquidity absorbing operations

1. REPO Auction – for Liquidity Absorption. A REPO auction is a bilateral transaction under which the Central Bank sells government securities to credit institutions and subsequently repurchases them at a predetermined price after a specified period. The Central Bank sets the REPO rate at the level of the policy rate. This, in turn, represents the return (price) on the funds temporarily provided by credit institutions to the Central Bank under REPO operations. Central Bank bonds are the subject of the purchase and sale transaction.

For reference: “Regulation on the Procedure for Concluding and Executing REPO Transactions with Government Securities of the Republic of Uzbekistan.”

2. Central bank’s bonds – issuable securities of the Central Bank, issued in electronic form and entitling the holder of the bond to receive income in the prescribed manner.

For details, see the Regulation “On the Procedure for Issuing and Circulating Bonds of the Central Bank of the Republic of Uzbekistan”

3. Deposit auctions – Central Bank operations to attract money from commercial banks for deposits at the policy rate. These auctions are carried out in the form of “fixed rate – full allotment” from March, 2022.

For details, see the Regulation “On the Procedure for Conducting Deposit Operations with Commercial Banks of the Central Bank of the Republic of Uzbekistan”

4. Overnight deposit - standing facilities, one-day transactions at a rate of "policy rate - 2%".

 REPO Auctions — the Main Instrument for Liquidity Absorption.

Starting from July 16, 2026, the Central Bank introduced 7-day REPO auctions to effectively absorb excess liquidity from the banking system. This instrument replaced the practice of issuing 7-day Central Bank bonds and contributes to more effective implementation of monetary policy operations based on market mechanisms.

   

---