Today, on May 19, 2015, the Verkhovna Rada of Ukraine adopted in principle a Draft Law On Amendments to Certain Legislative Acts of Ukraine with regard to the development of the institutional capacity of the National Bank of Ukraine (registered as No 2742).
The Draft Law was presented to the Parliament by First Deputy Governor of the National Bank of Ukraine Oleksandr Pysaruk.
According to him, the adoption of this draft law will enhance the central bank's efficiency and effectiveness in performing its mandate. The central bank's independence in monetary policy implementation and a legally entrenched ability of the regulator to determine and implement the monetary policy are the necessary prerequisites for the performance of its functions in a proper manner.
The fundamental changes concern two aspects of the activities of the National Bank – its independence as a regulator and transformation of its governance framework in an effort to make it more efficient.
"We do not insist on the regulator being granted the rights beyond its mandate or new instruments of influence. The adoption of this critical draft law represents the first step on the path towards strengthening the independence of the regulator, which is the requirement set by Ukraine's major creditor – the International Monetary Fund. Firstly, this Draft Law secures the financial independence of the central bank and strengthens the internal audit at the National Bank. Secondly, this draft law is intended to fundamentally change the working procedures of the Board and Council of the National Bank of Ukraine," said Oleksandr Pysaruk.
He also added that the proposed draft law takes into account not only the objective realities facing Ukraine and the requirements set by the IMF, but also practices of the countries where the efficient central banks are capable of maintaining financial stability by using effective monetary policy instruments available at their disposal and focusing the monetary policy on the economic development.
Oleksandr Pysaruk thanked the members of the Ukrainian Parliament for legislative support of many important issues. In particular, the laws are passed that have strengthened control over operations with related parties, liability of owners and bank managers for their financial institutions' performance and streamlined the requirements to disclosing the bank ownership structure.
For reference
The Draft Law On Amendments to Certain Legislative Acts of Ukraine with regard to the development of the institutional capacity of the National Bank of Ukraine (registered as No 2742) is intended to strengthen the oversight mandate of the Council, in particular, in terms of charging it with the task of carrying out internal audit and exercising control over risks. It is envisaged to reduce the number of the members of the Council of the National Bank of Ukraine to 9 persons and establish the remuneration for the performance by the Council members of their functions. The Draft Law stipulates to reduce the number of the members of the Board of the National Bank of Ukraine to 6 persons, including the Governor of the National Bank of Ukraine. The Board of the National Bank of Ukraine will be transformed into a collegial body with the equal rights of all its members. With a view to ensuring a more prompt decision-making process when it comes to the specific areas of focus of the central bank, the regulator will set up special committees to which the NBU Board will delegate some of its powers. What is new and important in the draft law is that the provision under which all the members of the Council of the National Bank of Ukraine could be dismissed at a time has been removed from it. This provision was inappropriate as the simultaneous dismissal of all the members of the NBU Council could bring the central bank to a halt.