Meeting with Heads of Businesses to Discuss NBU Activities as Mega-Regulator

On 22 October 2021, the NBU hosted a meeting on “NBU Activities as a Mega-Regulator” with heads of Ukrainian businesses that participate in business outlook surveys. The meeting aimed to inform members of the business community about the regulator’s activities and receive feedback on urgent issues requiring constructive dialogue and effective solutions.

This event brought together representatives of 71 companies from almost all sectors of the economy and all regions of Ukraine. NBU Deputy Governor Sergiy Nikolaychuk, NBU Statistics and Reporting Department Director Yuriy Polovniov, and experts from the NBU’s Open Market Operations Department, Nonbank Supervision Department, and Payment Systems and Innovations Department attended the meeting.

This is the second time the NBU has used Zoom to communicate with business people so that they can ask questions before and during speaker presentations or during the Q&A session.

The meeting covered a wide range of issues, including:

• monetary policy under the inflation-targeting regime
• experience of using a mobile app for online business surveys
• review of the nonbank financial services market, in particular the insurance market
• currency regulation.

Monetary policy performance and prospects under the inflation-targeting regime

The NBU’s five key achievements in the six years since it began targeting inflation:

• Inflation and its volatility have decreased, while inflation expectations have improved.
• The exchange rate is more stable. There is a sustainable trend towards the de-dollarization of the economy. International reserves have been replenished to make the economy more resilient to new challenges.
• Interest rates are lower and more stable.
• Banks can maintain liquidity through free access to NBU loans.
• The economy is more resilient, while economic growth is more sustainable.

The NBU will continue to pursue the inflation-targeting regime. The NBU Board’s recent decision to keep the key policy rate unchanged at 8.5% is in line with the regulator’s goal of gradually reducing inflation to its 5% target. Should pro-inflationary risks materialize, the central bank stands ready to raise the key policy rate further and use other monetary tools to bring inflation back to the target.

Polls via mobile apps: a new trend or just a fad?

Central banks are paying increasingly more attention to communicating with the market as part of their policy-making and decision-making strategies, including through surveys. In September, the NBU had the honor of hosting the 11th Annual International Conference on Central Bank Business Surveys. The event convened central bankers from more than 20 countries and focused on new approaches to collecting and analyzing information during the pandemic. The NBU presented its experience of using a mobile app for online business surveys. This new tool optimizes data collection, increases the number of respondents, and simplifies their access to important information. Mobile surveys allow central banks to get immediate feedback from market participants, to find out in time how economic agents respond to policy decisions and actions, to measure their attitudes and expectations, and to develop effective policy tools based on survey data analysis.

Review of the insurance market

Since 1 July 2020, the NBU has been the regulator of nonbank financial institutions. The central bank has been making large-scale efforts to help this market recover and to bring the NBFIs operation, regulation, and reporting up to best global standards.

Insurance market data for the past four quarters shows that insurers have been able to return to business as usual and adapt to operating under quarantine restrictions. All major indicators of the insurance segment improved in H1 2021, despite 46 companies (over 20% of the market) having exited the market since 1 July 2020. Most of them ceased operations voluntarily, but eight companies had to shut down for failure to file earnings reports. Currently, 100% of registered insurance companies report their performance.

With the NBU as its regulator, the market for insurance and other nonbank financial services is undergoing a transformation and has already become more transparent and reliable.