The National Bank of Ukraine welcomes the adoption of the Law of Ukraine On Amendments to Certain Legislative Acts of Ukraine Regarding the Specifics of the Financial Sector’s Operation Due to the Introduction of Martial Law in Ukraine.
Ukraine’s financial sector is faced with unprecedented conditions caused by the war. The adoption of the latest law is an important step towards propping up its stability.
First, the NBU was vested with more powers. In particular, in a special period covering the effect of martial law and the period of reconstruction after the end of warfare, the regulator will be maintaining state agencies’ accounts designed to meet the needs of the state in repelling armed aggression against Ukraine and eliminating its consequences, as well as administering charitable donations and humanitarian aid.
Second, the focus of attention is the credit union market, which was significantly affected by the war. The possibility of suspending a credit union’s activity while martial law is in effect and subsequently resuming it, is being introduced among other things. Relevant decisions shall be made by the supervisory board of a credit union. Such a step will prevent an insolvency crisis on the market, and depositors of credit unions will be able to keep their savings.
Third, procedures for decision-making on the possible use of free liquidity of centralized insurance emergency funds of the Motor (Transport) Insurance Bureau of Ukraine to purchase war bonds (domestic government debt securities) were simplified to maintain the stability of the insurance market.
Fourth, as loan restructuring is currently the most effective mechanism for solving problems related to the repayment of loans for both banks and their customers, the Law of Ukraine On Financial Restructuring was extended until 1 January 2028.
Fifth, the implementation of the Law of Ukraine On Payment Services was rescheduled from 1 August to 1 December 2022.
Sixth, the requirement to guarantee pecuniary claims and rights to claim fulfillment of contractual obligations by first-class banks for the purposes of foreign investment was abolished. Today, it is important to align the said requirements with those foreseen in common law for national investors. Nowadays this provision is virtually nonoperational. However, it can be an obstacle to entrepreneurs restructuring debts by converting them into contributions to authorized capital by consent of a lender. The abolition of the said provision will be conducive to a decline in the debt burden on economic entities.
These and other amendments introduced by the Law On Amendments to Certain Legislative Acts of Ukraine Regarding the Specifics of the Financial Sector’s Operation Due to the Introduction of Martial Law in Ukraine will ensure stability in the financial sector of Ukraine and help it address the challenges of wartime.