Analytics. Articles. Comments
Published 06.06.2014 Igor Reutov
With respect to the measures which the National Bank of Ukraine (the NBU) may undertake in order to stabilize financial sector, it should be observed that Ukraine has undertaken comply with its obligations before the International Monetary Fund, stipulated in the Memorandum of Economic and Financial Policies. Therefore we can expect implementation of the commitments stated therein. Thus, the NBU will definitely abstain from using administrative regulations and restrictions as a substitute for conventional monetary policy tools. Direct interference into exchange rate will not be exercised on the part of the state regulator. Moreover, the NBU will participate in currency exchange market in order to accumulate reserves through market purchases. Furthermore, Ukraine has undertaken not to impose new restrictions affecting foreign exchange operations. In this regard it could be expected that no new restrictions in terms of foreign exchange operations will be introduced. However, the requirement as to mandatory sale of 50% of income nominated in foreign currency will be preserved.
In addition, the NBU will asses financial resilience and take steps to ensure adequate capitalization of the financial sector. For this purpose a diagnostic study will be launched on order to reveal weak banks which should be recapitalized by their shareholders. If the shareholders fail or become unwilling to recapitalize such ‘weak’ banks such institutions will be brought to insolvency.