The National Bank of Ukraine with Decision No. 28 of 16 January 2017 has updated the Comprehensive Program of Ukraine Financial Sector Development until 2020. The information was given during press event by Mr Mykhaylo Vidiakin, Director of Banking System Strategy and Reform Department of the NBU. He presented the updated document together with the Head of the National Securities and Stock Market Commission Mr Tymur Khromaiev, member of National Commission for the State Regulation of Financial Services Markets Ms Olha Hurbych and Deputy Managing Director of Deposit Guarantee Fund Mr Andrii Olenchyk.
“Comprehensive Program is a financial sector reforms road map, it’s a “live” document; its update is a way to give a new impulse to the measures, which currently need more attention and work from regulators and market participants. Main changes in document can be divided into three areas: we extended the Program’s sphere by adding new measures and actions as a response to current challenges; we provided more detail and consolidated current Program’s measures, and reviewed the deadlines for certain measures. Therefore, reforms are under way, and they will be even more deep and comprehensive”, said Mr Mykhaylo Vidiakin.
According to him, structure of the Program remains unchanged: three blocks for ensuring financial stability, regulators’ institutional capacity building, financial services consumer and investors’ rights protection. Importantly, financial sector regulators have performed part of activities within these blocks.
“Biggest achievements of the reform for NBU in 2014-2016 are: clean-up of banking sector, significant enhancement of the banking sector transparency, successful implementation of inflation targeting, establishment and functioning of the Financial Stability Board, implementation of international standards for financial reporting etc. Along with that we recognize that interaction between regulators and the aim of intra-agency projects implementation remains complicated and needs additional coordination and synchronization of actions. Currently, after Program update the majority of projects has intra-agency cross-functional background, and the success of projects and changes implementation will depend on cooperation of all public authorities. We are ready to analyze mistakes, improve and build-up a dialogue, implement important social projects together”, noted Director of Banking System Strategy and Development Department, mentioning among least successful projects ensuring creditors rights, resolving issue of problem debts and implementation of project on redistribution of functions performed by the National Commission for the State Regulation of Financial Services Markets.
Moreover, in updated Program, measures were extended due to the following actions: drafting and implementation of new FX regulations, transition to IFRS 9, transition to international settlement standards ISO20022, including IBAN, liberalization of tax legislation for merchants, improvement of payment system oversight, update and execution of public banks strategy, fintech-segment development, practice of joint investment to securities, enhancement of banking system performance, development of NBU new website, consumers rights protection under P2P, P2B? lending etc.
NBU set the priority projects, in which it is leading, for further implementation of updated Program. This list includes yet not launched or new projects, which fall behind greatly, and projects, which considerably influence financial sector on the whole:
- For Governor’s framework, they are on restoring lending, redistribution of regulators’ functions, enhancing financial literacy of the public, introduction of financial services consumer rights protection system.
- For NBU bank supervision: restoring lending, transition to risk oriented bank supervision, banks merger mechanism streamlining, update and introduction of public banks development strategies.
- For monetary framework: restoring lending, further realization of inflation targeting strategic plan implementation, development of macro-prudential policy tools, reporting optimization.
- For NBU open markets framework: liberalization foreign exchange control, development of infrastructure capital market.
- For NBU payment transactions framework: cashless economy, transition to ISO20022 standards, including IBAN, development of infrastructure and tools of payment system oversight.
- For NBU financial and administrative framework: continuation of NBU internal transformation, IFRS 9 implementation, and Paperless project implementation.
We managed to restructure strategic areas set forth in Program, due to more clear understanding of them in general format from the very beginning of its development and availability of detailed concepts, strategies and implementation plans by separate available projects. One part of projects was already implemented, another was consolidated, and the rest was separated from joint measure. Mentioned changes will allow more clearly and transparently to structure work under projects of Program, taking into account their comprehensiveness and complexity, and more efficiently organize and coordinate work of leaders and stakeholders regarding their implementation.
In particular, following areas are consolidated:
- financial sector clean-up as to non-banking financial institutions within measure regarding work of regularors and Deposit Guarantee Fund with problem participants of financial sector;
- exercise of investors’ rights;
- consumer rights protection;
- regulation of problem debts issues;
- harmonization of taxation systems of financial sector instruments.
In addition, area regarding development and implementation of public banks development strategy, strategy of NBU entering international markets of banknote and coin production, and redistribution of functions of regulators (SPLIT project) was separated.
Review of part of deadlines for Program’s projects implementation was due to:
- extending and deepening of area, adding new measures to perform;
- delay in redistribution of functions performed by the National Commission for the State Regulation of Financial Services Markets, further build-up of consolidated supervision and control over financial services market;
- delay in adoption of draft laws, which are essential for further reform promotion. Therefore, for instance, over 10 projects depend on adoption of draft laws No. 2413a and No.2414 regarding splitting functions of the National Commission for the State Regulation of Financial Services Markets.
- somewhat ambitious deadlines for Program’s measures from the very beginning of its development.
Reference
On 15 May 2020 the National Reforms Council upheld and approved the Comprehensive Program of the Ukrainian Financial Sector Development Until 2020. The Program was approved by NBU Regulation No. 391 of 18 June 2015 (update - NBU Board Resolution No.28 of 16 January 2017), and by the respective decisions of other financial market regulators (decision of the National Securities and Stock Market Commission No.31 of 30 June 2015 (update - decision No. 31 of 19 January 2017), and order of the State Commission for Regulation of Financial Services Markets No.1367 of 11 June 2015).
The main objective of the Comprehensive Program is to build a fully-fledged, efficient and effective financial market in Ukraine, develop all the market segments, build its infrastructure, and strengthen its resilience to external threats.
- Comprehensive Program will be implemented in three stages:
- Stage I - resolving problems of the past and the financial sector clean-up (2014-2016);
- Stage II - setting the stage for the system development (2015 - 2017);
- Stage III - implementation of measures for the development (2017 - 2020).