The NBU has approved an updated Macroprudential Policy Strategy. The document is based on the experience of the first two years of macroprudential policy implementation, but also takes into account the approaches to regulating the nonbank financial sector that the NBU has taken since acquiring its mandate to regulate and supervise nonbank financial institutions (the Split).
The Macroprudential Policy Strategy (hereinafter the Strategy), published at the end of 2018, laid the groundwork for the implementation of a systemic macroprudential policy that aims to strengthen the stability of the financial system. At the same time, the Strategy was focused exclusively on the banking sector.
In light of the Split and the expansion of the NBU’s powers, the central bank has updated the Strategy. According to the NBU, the nonbank financial sector currently does not generate systemic risks due to its small size, low interconnectedness of its members with each other and with the banks, and because of the features of its business models. However, the NBU will continue to monitor how the sector evolves and, if necessary, use macroprudential instruments to safeguard the financial system against the accumulation and materialization of systemic risks. These tools are often similar to those used in the banking segment.
Also, the focus of the Strategy in the banking sector has been further clarified. Since the Strategy’s publication two years ago, one of the systemic risks mentioned in the previous document – bank lending to related parties – has been eliminated. In addition, with the spread of COVID-19, plans for the introduction and use of macroprudential instruments have been updated. In particular, the introduction of capital buffers has been postponed.
The cycle of financial sector publications and reviews has been supplemented by the quarterly Nonbank Financial Sector Review and the Funding Conditions Survey, which the NBU plans to launch in 2021.
The implementation of the NBU’s updated Macroprudential Policy Strategy will contribute to the stability of the financial system and thus to sustainable economic growth.
The purpose of publishing the Strategy is to increase the transparency, clarity, and predictability of macroprudential policy for financial market participants, in line with EU practices. The Strategy outlines the goals, focus, and indicative list of macroprudential policy instruments in Ukraine.