The National Bank of Ukraine Pushes ahead with Implementing EU Directives

With assistance from the EU, the National Bank of Ukraine  pushes ahead with implementing EU Directives in line with the EU-Ukraine Association Agreement and the Comprehensive Program of Ukraine Financial Sector Development Until 2020.

For Ukraine, European integration serves as a clear guideline for pursuing national interest interests, building an advanced and democratic country and strengthening the country's position in the international arena. Furthermore, this process is a lengthy endeavor requiring continuous efforts to streamline regulations and procedures of the public authorities and markets  regulated by them, including efforts to develop and strengthen cooperation with the European institutions,” said Head of NBU Office European Integration and International Programs Volodymyr Kuchyn in his opening speech at the fifth meeting of the Steering Committee within the framework of the EU-FINSTAR Project (Technical Assistance in the Ukrainian Financial Sector's Priority Areas).

Mr Kuchyn said that the integration with the European community of central banks was set out in the NBU’s Vision Statement in 2015.

“The NBU’s strategic objective is to seek integration with the EU's single financial services market. To this end, Ukraine implements the EU–Ukraine Association Agreement, including its provisions on the approximation of Ukraine’s financial sector to the EU's standards in accordance with the schedule and gradually harmonize national legislation with EU legislation,” underlined Mr Kuchyn. The NBU adopts international standards to ensure the effective and transparent regulation of the banking sector,  including the principles of the Basel Committee on Banking Supervision, FATF Recommendations  and FATF and OECD recommendations. The NBU has recently  approved a plan for the implementation of the key EU directives in the financial sector. We have a clear stepwise plan for the implementation of the EU rules for access and requirements for credit institutions, exercising oversight of their performance, including rules governing e-money circulation and bank resolution”.

Mr Kuchyn pointed out that the EU provides technical assistance to the NBU to implement financial sector reforms under the EU-FINSTAR Project, which has been implemented since 2015. The Project is designed to support measures by the NBU and other financial regulators to overhaul the financial sector and implement the EU-Ukraine Association Agreement and the Comprehensive Program of Ukraine Financial Sector Development Until 2020. The EU-FINSTAR Project aims to assist Ukraine’s financial regulators in their efforts to create a financial services sector capable to ensure stable, secure and efficient financial markets to secure full integration with the EU's single financial services market.

The EU-FINSTAR Project’s agenda includes nine components and  topical tasks facing Ukraine’s regulators in the process of reforming the financial sector:

•  the adoption of IFRS and FINREP-XBRL taxonomies
•  a strengthening of the framework for monetary and financial statistics compilation
• implementation of consolidated supervision
• enhancement of macroprudential supervision and financial stability
• establishing the necessary preconditions of the future gradual implementation of the free flow of capital
• regulation of auditing activities
• bringing accounting into line with international standards
• implementation of the compensation program for investors; and
• implementation of the Basel II principles for banking supervision.

The Project has already delivered concrete results, including the development of a new law on Foreign Currency, Auditing, drafting amendments to the Law of Ukraine On Accounting and Financial Reporting in Ukraine. The NBU also implements a number of projects, including XBRL FINREP taxonomy project and the IFRS 9 standards  for the banking sector.  The central bank adopts EU practices in the following areas:

• monetary and financial statistics;
• licensing and supervision over financial groups and conglomerates;
• macroprudential supervision;
• the prevention of systemic risks;
•  risk management  in banks;
• internal capital adequacy assessment;

These are the NBU’s priority areas of focus under the Comprehensive Program of Ukraine Financial Sector Development Until 2020. The NBU is involved in continuous efforts in these areas. The central bank is on track with implementing these projects.