On October 1, 2014, the National Bank of Ukraine hosted a regular meeting with the senior managers of major banks with regard to the stabilization of the foreign exchange market. The meeting participants discussed cash foreign exchange market issues, removal from the market of insolvent banks and banks conducting illegal money laundering transactions, ways to prevent further deposit outflows, and amendments to NBU regulations. The meeting was attended by members of the Interagency Working Group set up to stabilize the foreign exchange market and to crack down on money laundering.

Governor of the National Bank of Ukraine Valeriia Gontareva has reminded those present at the meeting that the issue related to preventing undue exchange rate fluctuations remains topical. Yet, the National Bank has sufficient instruments at its disposal to put the balance of payments and foreign exchange market in equilibrium. The situation in the country is difficult, but it is kept under control.

The National Bank continues to hold weekly auctions for the sale of foreign exchange at a fixed exchange rate. In particular, on October 2, 2014, the National Bank of Ukraine is to sell foreign exchange to banks for a total of USD 200 million, among other things, in order to supply the cash departments of banks with foreign exchange cash. Banks must sell the foreign exchange acquired for this purpose within 5 days. Banks are required to return the unsold foreign exchange to the National Bank. Valeriia Gontareva has noted that the regulator expects that every individual who wants to purchase foreign exchange cash in an amount equivalent to UAH 3,000 (USD 200) per business day will be able to do it. In the near future, the auctions for the sale of foreign exchange are expected to be held every Thursday.

The National Bank pushes ahead with reforming the foreign exchange market of Ukraine. The idea of establishing 15 market makers in the foreign exchange market, which was announced earlier this year, has been approved by the International Monetary Fund. The procedures to put this idea into practice under more favorable conditions are currently being developed. Presently, the banking system is not prepared for it. Resources in the interbank market are still being redistributed in an inefficient way.

Sharp exchange rate fluctuations had an adverse impact on public confidence in the banking system and we observe an outflow of deposits from banks. In order to stabilize it, the National Bank has prepared amendments to the Regulation on Issuing Emergency Loans by the National Bank of Ukraine to Ukrainian Banks.  Pursuant to the amended Regulation, the loan disbursement period will be extended and the cost of loans will be set at the discount rate plus 1.5 percentage point. The collateral eligibility requirements will be tightened. Differentiated framework for the assessment of collateral will be applied.

First Deputy Governor of the National Bank of Ukraine Oleksandr Pysaruk has said that this week the ruling to declare one bank insolvent is being prepared. Some more banks will be declared insolvent next week. Insolvent banks and banks engaged in illicit activities are being removed from the market. “Once again I would like to appeal to banks: “Stick to the rules! Follow the instructions!” – he said. “Banks that will violate the banking legislation, in particular, the foreign exchange regulation will be fined. For example, one of the banks has recently been fined for an amount equal to the value of illicit transaction this bank conducted. Financial monitoring in banks should be efficient". In addition, the law enforcement bodies and the National Bank of Ukraine will remain involved in concerted efforts to clamp down on the “shadow” foreign exchange market. Detection and liquidation of converting centers is a matter of state security.

Director of General Department of Monetary Policy has informed those present at the meeting that amendments are being prepared to NBU Board Resolution No. 540, dated August 29, 2014, "On the introduction of additional mechanisms to stabilize the money and foreign exchange markets of Ukraine", in particular, with regard to transactions with banking gold, cash disbursement for travel and beneficent aid, etc.

Governor of the National Bank of Ukraine Valeriia Gontareva noted: “The National Bank of Ukraine is forced to resort to short-term administrative measures. It is obvious that the problem cannot be solved by using administrative methods. As soon as the situation returns to normal, we will need to return to market methods of regulating markets promptly".

The bankers have backed the NBU's policy of holding foreign exchange auctions and expressed their opinion about the need to enhance the protection of creditors' rights and eliminate corrupt practices in the foreign exchange market. They all have pointed out that the restoration of depositors' confidence in banks paves the way for the smooth functioning of the banking system.