Yesterday, jointly with the Ministry of Finance of Ukraine, we sent a letter to the IMF requesting to send a mission to Kyiv. Less than an hour later, Ms Christine Lagarde, the IMF's managing director, confirmed that the IMF would co-operate with Ukraine. Next week an IMF fact-finding team is coming to Ukraine. The international experts from the EU are to visit Ukraine. We have had a conversation with Mr Jan Tombinski who has confirmed this visit. We count on financial support from other leading countries and creditors, including both public and private entities.
In a letter that came yesterday, the EBRD restated its intention to co-operate with Ukraine in areas including the economic development, funding important projects in Ukraine’s priority sectors, innovative projects, and other projects designed to drive economic growth. These projects are crucial as they will create new jobs. The economic recovery will be a step-by-step and continuous process rather than an easy one. We have the clear development plan.
Regarding the gold and foreign exchange reserves, I should say that unlike our “predecessors” who have spent USD 20 billion, we do not deplete the international reserves. The current size of the gold and foreign exchange reserves is bearable. Given that Ukraine receives an IMF loan, the gold and foreign exchange reserves will meet the international standards in terms of their size. Currently, the stock of international reserves is sufficient to make timely debt repayments to creditors. Presently, the current repayment schedule is met.
The exchange rate policy has been placed under control of the National Bank of Ukraine. The members of the National Bank of Ukraine Board hold daily meetings to discuss the latest developments in the foreign exchange market. We maintain communication with virtually all the banks. We are clamping down on those banks that violate the foreign exchange legislation. I would like to warn that banks involved in speculations and those market players who violate the laws of Ukraine and infringe ratios set by the central bank will be held accountable. Yesterday I held talks with the Chief of the Ministry of Internal Affairs and Ukraine's Prosecutor General over our joint actions in such cases.
We have moved toward greater exchange rate flexibility, which means the exchange rate can move in both directions. At present, a wave of excessive sentiment is gripping the foreign exchange market, nudging the economic agents, including the public, into unreasonable decisions.
The situation in Ukraine has prompted the National Bank of Ukraine to take a series of decisions. We mean Resolution No. 48 on liquidity and Resolution No. 49 on the foreign exchange regulation. I would like to emphasize that these measures are temporary and will remain in force for a maximum of one month.
We feel confident that soon the situation will improve and the exchange rate will stabilize. I call for every Ukrainian citizen to refrain from making decisions that after a while might lead to unnecessary losses.
As far as central bank liquidity provision is concerned, we provide liquidity to banks in the amounts required. The liquidity is provided through the conventional monetary instruments and the mechanisms developed by the National Bank of Ukraine the day before yesterday. They are based on transparency, loyalty, comprehensibility and protection of banks that are currently failing to forecast the gaps of long-term deposits.
The main requirement is to exercise control over the utilization of resources provided to banks so that they would not pass through the conversion centres. Once again I would like to warn the banks doing business with speculators and conversion centres. This shall be terminated immediately, the National Bank of Ukraine and the General Prosecutor's Office have agreed to coordinate their efforts to bring those responsible to justice.
The banks should use liquidity provided by the National Bank to meet their obligations to clients and depositors. A depositor and a client are the key figures for us. The appropriate punitive measures will be taken immediately against those banks that use the funds obtained from the central bank to conduct wrongful transactions in the foreign exchange market.
Regarding banks’ cash flows, it should be noted that banks are provided with foreign exchange and hryvnia. They are fulfilling their obligations. We are currently inspecting those banks that have violated the regulations issued by the National Bank. The punitive measures have been taken against 8 banks that have infringed the foreign exchange legislation.
As far as bank supervision is concerned, in order to unlock banks’ funds, as a temporary measure we have cancelled the requirement obliging banks to hold the provisions in a separate account with the National Bank of Ukraine under loans in the foreign currency. We make efforts to speed up the procedure of banks’ capitalization. We will also consider the issue related to special bank regulation in the context of the impact of the devaluation of the national currency on banks’ performance indicators.
Regarding strategic steps, the National Bank of Ukraine in co-operation with Ukrainian banks and international experts have embarked on the development strategy for the banking sector. Our actions are discreet and far-reaching. Everything will be transparent. We will start the reform process from the National Bank. We will promote a savings culture and look at ways to cut expenditures. We are set to carry out the audit and inform the public on the unnecessary things purchased for the National Bank of Ukraine at the expense of public funds.