The National Bank of the Kyrgyz Republic introduced overnight deposits on Feb. 17.

The new instrument of monetary policy allows the commercial bank to deposit funds in the NBKR at a particular interest rate for one night.

The committee on monetary regulation of the National Bank of the Kyrgyz Republic set the overnight deposit rate at 1 percent as of Feb. 13.

The new instrument is expected to help strengthen the interest rate transmission channel of the monetary policy, which is geared toward achieving and supporting stability of prices.

The instrument will allow commercial banks to revise the interest rate policy on their demand deposits. They can also revise interest rates on current accounts for clients and allows banks to further increase the inflow of funds into the banking system by decreasing the use of cash.

The National Bank of the Kyrgyz Republic determines the monetary policy of the Kyrgyz Republic. It also exercises regulation and supervision over banks and financial institutions. It develops and conducts the uniform currency policy and also has sole responsibility over the issue of banknotes. The bank also promotes effective functioning of the payment system and establishes rules of conducting banking operations, accounting and reporting for the banking system.