Purpose. To support systemic changes in Ukraine’s economy by transforming the country’s financial sector into a well-functioning, competitive market that meets European Union (hereinafter referred to as the EU) standards and is integrated into international financial systems.
Objectives:
- to ensure confidence in the integrity and soundness of financial markets through strong and independent regulation and supervision of financial markets;
- to create conditions for efficient and affordable financing, fair pricing in commodity and capital markets through, inter alia, a well-developed financial infrastructure;
- to diversify financial services and instruments, and to promote the emergence of alternative sources of financing by strengthening financial service providers, intermediaries and facilitators and competition between them;
- to increase financial inclusion through secure digital financial initiatives;
- to increase market transparency by engaging business associations, mass media, and civil society.
The FSR Project consists of four components:
Component 1: Market regulation and supervision. This component includes work to improve market regulation and supervision, based on the Financial Sector Development Strategy of Ukraine for 2025 (hereinafter referred to as the “Strategy 2025”) as the main sector development document, to promote strong and independent financial market regulation and supervision, build confidence in the financial market and ensure competition. This may include assistance in developing the laws, subordinate regulations and public policies necessary to implement reforms in the banking and non-banking sectors (e.g. insurance market), and in the area of financial technology (fintech). It is also necessary to strengthen the capacity of financial sector regulators to implement and monitor compliance with subordinate regulations to ensure fairness and equal conditions for all participants, manage financial sector risks, and accelerate the development of capital markets in line with international standards.
Component 2: Financial infrastructure. This component is concerned with strengthening Ukraine’s financial infrastructure to enable reliable and efficient transactions. These activities will help build more efficient capital and commodity markets that meet international standards, provide better access to information, transparent pricing models, new financial instruments, and secure settlement mechanisms for market participants. This component includes improving the legal and regulatory framework for capital and commodity markets, as envisaged in the Strategy 2025, and supporting the financial transaction and payment ecosystem to create efficient, secure and cost-effective trading platforms and a modern payment system, including for electronic payments.
Component 3: Private sector intermediaries and facilitators. This component involves engaging with the private sector to accelerate the expansion of private finance and new financial services and instruments to increase the number and range of financial service providers and services offered to individuals, SMEs, and start-ups. Activities will focus on bank and non-bank institutions, including investment banks, leasing companies and payment service providers, and digital financial services such as fintech companies. It also includes working with business associations to strategise, align and collaborate to scale up activities through inclusive industry initiatives.
Component 4: Transparency and communications. This component involves engaging the Government of Ukraine, business associations, civil society organisations, non-governmental public control organisations and mass media to enable them to actively promote financial sector reform and consumer rights protection to enhance transparency, enforcement, information and education of citizens. It also includes enhancing market transparency and accountability by supporting independent sources of information and data, and improving the quality and volume of communications by these entities and the Government of Ukraine on financial sector reform. The component will contribute to improving the financial literacy of citizens and SMEs.
Several projects have been launched under the FSR:
- diagnostics of information technology and information security and development of an improvement plan for the Settlement Centre for servicing contracts in financial markets;
- assistance with the National Bank’s certification according to the international standard ISO 37001:2016 Anti-bribery management systems – Requirements with guidance for use;
- preparation of the motivational and technical component of initiating the assessment of the BankID System by an independent EU conformity assessment body, namely its recognition as an electronic identification (EI) scheme with a corresponding EI tool with a high or medium level of trust;
- cooperation on the implementation of the automated process management system (APMS);
- holding the World Money Week;
- a roundtable discussion was held with the participation of government bodies on the introduction of a political risk insurance mechanism.