The National Bank of Ukraine (NBU) has released the White Paper: Future Regulation of Credit Unions. This is the first of six planned sector-specific documents, where the NBU as the future regulator of nonbank services markets outlines the current situation, concerns and intended regulatory changes.
When devising its vision set out in the White Paper, the NBU focused on the important role of credit unions for improving accessibility of financial services for the general public, since credit unions operate mostly in rural and remote regions.
The future regulation prescribed in the White Paper will advance conditions for development and competition on the credit union market, improve the market’s reliability, transparency and solvency. The NBU intends to introduce innovations to provide credit unions and respective customers with:
- an extended list of services they may provide/receive
- better accessibility of services
- an option to establish a proprietory financial integration center
- new liquidity assistance and solvency tools.
At the same time, the NBU will perform comprehensive supervision of credit unions with a risk-based approach for licensing, regulation and supervision guided by the proportionality principle for requirements to the union risk level, perspective outlook for understanding potential risks, early detection of concerns and timely response, professional judgement and legal certainty.
Improved market regulation and expansion of options for its participants will advance credit unions on the financial market, ensure an effective, capitalized and stress-resistant market, where the consumer rights in financial services are well safeguarded.
Considering the significant changes suggested for the market in the White Paper, such will be introduced gradually considering the real capabilities of credit unions to comply with such requirements.
Suggestions and visions set out in the White Paper are not final and are open for discussion, that’s why the NBU urges all interested market players to take an active part in discussing the abovementioned approaches to regulation in order to determine the best ways to regulate specific issues of credit union operation. Please send your suggestions to [email protected].
For reference:
Credit unions are financial institutions issuing loans and providing other financial services to the union members on the account of their joint contributions. Credit unions exist to promote sound spending and welfare of the union members by providing services at cost.
As of the end of September 2019, 337 credit unions operated in Ukraine accounting for over 465,000 members. The total assets of credit unions amounted to UAH 2.4 billion.