On 16 June 2016, the National Bank of Ukraine hosted a regular meeting of the Steering Committee of Ukraine’s International Donors providing technical and advisory assistance to Ukraine within the framework  of the Comprehensive Program of Financial Market Development of Ukraine until 2020.

The Steering Committee comprises representatives from international organizations that effectively cooperate with the Ukrainian financial sector regulators in implementing projects of the Comprehensive Program. 

The meeting featured representatives of the International Monetary Fund, World Bank,  International Finance Corporation, European Union, United States Agency for International Development (USAID), U.S. Treasury Department, Department for International Development of the United Kingdom (DFID), German Agency for International Cooperation (GIZ), Narodowy Bank Polski and the Government of Canada, as well as Technical Assistance missions that are currently working in Ukraine.

NBU Deputy Governor Mr Rashkovan reported on the progress status of the Comprehensive Program measures, highlighting the key projects already  delivered, as well as those scheduled for 2016-2017.

“We have adopted a flexible exchange rate regime, embarked on the adoption of an inflation-targeting monetary policy framework, contributed much to achieve macroeconomic stabilization in Ukraine, put weak and unviable banks into resolution, while ensuring that  solvent banks have enhanced  the transparency of the ownership structure, increased their capital and shifted to the International Financial Reporting Standards.   At the next stage, our top priorities are  to gradually ease and remove FX restrictions, create  conditions supporting the revival of lending and economic growth, and transpose EU directives  on financial sector regulation into domestic laws,” said Mr Rashkovan.

According to the NBU Deputy Governor, the central bank has successfully completed the first stages of its internal transformation project, with the NBU focusing on its core functions, that have been centralized. Efforts are currently underway to reshape and streamline the internal processes. 

“We are moving towards turning the concept of digital banking  into reality. This concept enables the effective use of available data as input for decision-making purposes in the performance of the regulator’s core functions, as well as to ensure the transparency of information.  Digital banking will help reduce the red tape burden weighing down banking  processes by exempting banks from a binding requirement to use paper documents in their business operations  and allowing banks to shift the workflow to the electronic document from the paper document workflow. Thus, we have laid the groundwork for further development and have a clear plan to move the program forward,” underlined Mr Rashkovan.

Additionally, the central bank’s top manager expressed his gratitude to the international donors for their comprehensive support and contribution to the financial sector reforms.

“At our last meeting we called on you to join in efforts to implement a series of projects. These include projects aimed to  enhance the  supervisory function in overseeing the financial services market, draft a new foreign exchange regulation, promote cashless transactions, design a development strategy for state-owned banks,    increase financial awareness among the public and enhance the protection of creditor rights, support financial sector reforms, as well as projects intended to enhance the ability of the Deposit Guarantee Fund. I am delighted to note that we have already received substantial technical and advisory assistance under most projects. I hope that our effective cooperation   will continue and become even more fruitful in the future,” said the NBU Deputy Governor.

Additionally, representatives from the Ministry of Finance of Ukraine, National Securities and Stock Market Commission, National Commission for the State Regulation of Financial Services Markets,  Deposit Guarantee Fund,  Antimonopoly Committee of Ukraine,  and the Independent Association of Ukrainian Banks also expressed their gratitude to the international donors for their timely and professional assistance. In their turn, the international donors confirmed their readiness to further actively support the financial sector reforms implemented in Ukraine.

Mr Rashkovan reassured the Steering Committee that the NBU would remain committed to improving the quality of its core functions to ensure price and macrofinancial stability and building a modern, efficient central bank. This being said, the NBU’s key projects to be implemented in 2016-2017 include:

• further steps to be taken to  implement inflation targeting monetary
• FX liberalization
• implementation of risk-based banking supervision
• the enhancement of corporate governance in banks
• the consolidation of the oversight of the financial services market
• implementation of the cashless economy policy and promotion of cashless settlements in Ukraine.
• the creation of conditions supporting the revival of lending
• the streamlining and simplification of the banking sector consolidation 
• the development of the capital markets infrastructure 
• the improvement of reporting practices
• the development and launch of an international market entry strategy for the NBU Banknote Printing and Minting Works
• the enhancement of the NBU’s transparency through the publication of open data in user-friendly format on the NBU’s website

All these projects are included in the NBU’s Comprehensive Program of Financial Market Development of Ukraine until 2020.  The NBU Deputy Governor also pointed out that the NBU faces headwinds on its reform path from time to time as more than 20 draft laws on financial sector required to implement the Comprehensive Program of Financial Market Development of Ukraine until 2020 are still pending in Parliament.

The next meeting of the   Steering Committee of Ukraine’s International Donors has been scheduled for the end of the year.