At its regular meeting on 19 July 2023, the Financial Stability Council (hereinafter the "FSC") approved the updated Strategy of Ukrainian Financial Sector Development ("the Strategy"), which was drafted in line with the Memorandum of Economic and Financial Policies between Ukraine and the International Monetary Fund. The FSC members agreed that the institutions that signed the Strategy will hold a public presentation of the Strategy and publish it in late August 2023.
The Strategy is made up of five sections outlining the financial sector’s current standing, vision and mission, five strategic goals and measures to implement them, expected results, and Ukraine’s international commitments in the field of financial services. The measures envisaged by the Strategy are divided into short-term and medium-term ones. The short-term measures are aimed at ensuring stability and preventing the situation in the financial sector and the overall economy from deteriorating. The medium-term measures are intended to lay the groundwork for the future reconstruction and growth of the economy.
The strategic goals of the updated Strategy are: macroeconomic stability, financial stability, the financial system’s focus on the country’s recovery, cutting-edge financial services, and the institutional capacity of regulators and the Deposit Guarantee Fund.
During the meeting, the FSC members also reviewed systemic risks to the financial sector. In general, the risks are moderate and under control, except for the geopolitical risk. Aid to Ukraine is becoming increasingly systemic as the war drags on.
The global economy has managed to avoid the risks of a worldwide recession, but the economic growth in Ukraine’s main trading partners is set to be slow, as is the pace of increase in world trade. The Ukrainian economy is gradually recovering, but remains vulnerable to security risks. Headline inflation is declining faster than expected. Public finances are in good shape, primarily thanks to international support. The FX market is fairly stable and balanced. The comfortable level of international reserves has provided a margin of safety for a gradual easing of FX restrictions.
The banking system has retained its high liquidity and profitability. Based on the results of an ongoing resilience assessment, a plan will be developed to roll back prudential easing measures and implement regulatory requirements further. The FSC prioritizes the introduction of new capital adequacy requirements, a return to the implementation of deferred measures, and the reimposition of requirements to build capital buffers.
FSC members who participated in the meeting: Andriy Pyshnyy, NBU Governor, Serhii Marchenko, Minister of Finance of Ukraine, Yuliia Svyrydenko, First Vice Prime Minister and Minister of Economy of Ukraine, Svitlana Rekrut, Managing Director of the DGF, Ruslan Mahomedov, Head of the National Securities and Stock Market Commission, Kateryna Rozhkova, NBU First Deputy Governor, Dmytro Oliinyk, NBU Deputy Governor, Yurii Drahanchuk, Deputy Minister of Finance of Ukraine for European Integration, Rostyslav Shurma, Deputy Head of the Office of the President of Ukraine, and other heads of institutions comprising the FSC.
The FSC was established by presidential decree in March 2015. The FSC provides a forum for the professional discussion of systemic risks to domestic financial stability.