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The Rehabilitation of NCDs

Issuance of interbank negotiable certificates of deposit (NCDs) has rebounded in Q1 2018 after regulatory changes limited their growth in late 2017. The rise in issuance reflects difficulties banks are facing in attracting liabilities as old loans migrate back on balance sheet, explaining the weak growth in deposits and monetary aggregates so far this year. While the recent RRR cut buys banks some time, banks will probably continue issuing larger volumes of NCDs until deposit growth recovers in the long term.

Posted April 26, 2018
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