National Bank of Ukraine

NBU Extends Powers of Authorized Banks to Increase Efficiency of How They Manage Cash Reserves
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31 October 2018


The National Bank of Ukraine (NBU) has extended the powers of authorized banks so that they will manage the regulator’s cash reserves more efficiently.


In particular, authorized banks will be able to:

-        add to the stored cash reserves the bundles of banknotes to be recounted that they accept from other banks

-        record and process them separately.


In addition, the procedure for application and authorization has been changed. Moreover, deadlines for cash recounts have been extended, which creates favorable conditions for authorized banks to manage the cash reserves that they store.


In order to mitigate their operational risk, authorized banks have to develop a contingency plan to organize the handling of the cash reserves that they store. This plan is subject to approval by the NBU, and regular tests and updates based on the outcomes of such tests.


The NBU will be entitled to impose penalties on authorized banks in case of repeated violation of terms of storing the NBU’s cash reserves.


Relevant amendments were made to the Regulation On Transferring Cash Reserves to Authorized Banks for Storage by NBU Board Resolution No. 112 dated 23 October 2018 (hereinafter – Resolution No. 112).


Resolution No. 112 comes into effect on 1 November 2018.


In addition, on 1 January 2019, the paragraphs [1] come into effect concerning:

-        - conclusion of an amended agreement on storing the cash reserves of the NBU

-        - capability to add the cash to be recounted to the stored cash reserves

-        - imposition of penalties on authorized banks.


For reference

The Regulation On Transferring Cash Reserves to Authorized Banks for Storage has been developed to support the implementation of the Policy on Cash Circulation in Ukraine [2], which provides for transition from the current partial control to the delegation cash cycle model.


The delegation cash cycle model implies that the NBU delegates some of its regional activities to other market participants – banks or cash-in-transit (СІТ) companies.





[1] Paragraph 1 sub-paragraph 4 indent three, paragraph 8 sub-paragraph 1 indents seven and eight, paragraph 9 sub-paragraph 7, and paragraph 10 sub-paragraph 1 of Resolution No. 112.

[2] Approved by NBU Board Decision No. 207 dated 6 August 2016.


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