A regular meeting of the Financial Stability Council of Ukraine, chaired by NBU Governor Valeria Gontareva, was held on October 30, 2015. The meeting participants pointed to the stabilization of the macroeconomic situation, notably a gradual recovery in output growth, a slower pace of inflation, improved balance of payments statistics and the stabilization of the banking sector.  The Council welcomed the successful completion of the debt-restructuring deal for Ukrainian Eurobonds and stressed the need to ensure that all Eurobond holders, including the Russian investors, are offered equal terms.

The Council members underlined that cooperation with the IMF and ensuring compliance with the memorandum of understanding with the IMF are crucial for the financial stability in Ukraine and all parties in charge of implementing the program of cooperation with the IMF must do their utmost to secure the disbursement of the third tranche under the EFF. Getting back on track with the IMF program would also contribute to the build-up of international reserves of the National Bank of Ukraine.

The meeting participants also discussed the development of state-owned banks.  The Council members unanimously highlighted the need for fundamental changes in the standards of corporate governance of state-owned banks as well as the review of existing business models and strategic objectives for them.  Further support for the state-owned banks at the expense of budget funds must go hand in hand with changes in their business philosophy. The Ministry of Finance is planning to finalize the development strategy for state-owned banks and present it to the public within next month.

The NSSMC outlined the steps taken to suspend the circulation of the securities regarded as being of a fictitious nature in the banking and insurance sectors. The Council members expressed their support for the first steps taken by the Commission and agreed to pool together the efforts of the regulators to withdraw the securities regarded as being of a fictitious nature from circulation.

Key information about the Council

The Financial Stability Council was established by the Presidential Decree in March 2015.  The Council comprises the Governor of the National Bank of Ukraine, the Minister of Finance of Ukraine (co-chairs of the Council), Head of the National Securities and Stock Market Commission, Head of the National Financial Services Commission, Managing Director of the Deposit Guarantee Fund,  First Deputy Governor of the National Bank of Ukraine, and Deputy Minister of Finance of Ukraine. The Council meetings are held at least once a quarter. The next meeting is scheduled for January 2016.