The Financial Stability Council Calls on Parliamentarians to Adopt Laws on Financial Sector Reforms
A regular meeting of the Financial Stability Council, chaired by the Governor of the National Bank of Ukraine Valeria Gontareva and with participation of the Minister of Finance of Ukraine Oleksandr Danyliuk, heads of the national commissions - financial market regulators Tymuk Khromayiev and Ihor Pashko, and Deputy Managing Director of Deposit Guarantee Fund Kostyantyn Vorushylin, took place on 21 Ooctober 2016.
Participants of the meeting noted the absence of significant risks for financial sector. Macroeconomic stability remains, and that, respectively, provides grounds for achieving inflation targets at level of 12%+/-3 p.p. by the end of 2016 and 8%+/-2 p.p. by the end of 2017. Households’ deposits continue to grow, thus testifying to eventual recovery of confidence in the banking sector.
Members of the Financial Stability Council stressed the need for earliest reforming of the NBU Council that will ensure institutional capacity of central bank and allow to transfer to the State Budget the part of the NBU profits in the amount of UAH 38.164 billion.
We recall that on 24 October the President of Ukraine appointed Mr Bohdan Danylyshyn and MR Vasyl Furman the members of the NBU Council. It allowed to hold first meeting of the NBU Council on 25 October. In particular, in response to the Financial Stability Council’s address, the members of the NBU Council adopted the distribution of profits of the central bank.
“It will significantly contribute to ensuring state finances stability. We work with the NBU as a team regarding the range of issues, and now I am convinced that this cooperation will be even more fruitful”, noted Minister of Finance Mr Oleksandr Danyliuk.
Also, participants of the meeting paid attention to current problems of household deposits insurance system and agreed to start a discussion on its reformation strategy.
Moreover, Financial Stability Council discussed a range of draftlaws submitted by parliamentarians during recent weeks, and emphasized the unacceptability of any initiatives aimed at impairments to independence of the NBU. Current version of the law on the NBU introduced the world recognized principle of central bank independence that provided NBU with the opportunity to perform it key function - ensuring price stability - more effectively. According to NBU Governor Ms Valeria Gontareva, legislative initiatives, submitted to the parliament regarding change of the mandate and objectives of the NBU, undermine this principle and, therefore, make it impossible to ensure prices stability and considerable economic growth.
Instead, members of the Council called parliamentarians to adopt as soon as possible the laws, which are critical to reforming and development of financial sector, and supported holding of a “financial day” in the Verkovna Rada on 1st November of current year.
For now, the following important draft laws expect to be adopted by the Verkhovna Rada:
• On Amendments to Some Laws of Ukraine (regarding stimulation of lending in Ukraine) registered under No. 4529. Its approval is to mitigate credit risks of banking institutions and, therefore, facilitate a revival of lending.
• On Amendments to Some Laws of Ukraine (regarding regulated markets and derivatives) registered under No. 3498. Its aim is to create conditions for development of derivatives market and introduce state supervision over regulated commodity markets.
• On consumer lending registered under No. 2455. Adoption of this draft law will secure financial service consumers’ from risks of their rights violation in way of providing them with full information to decide on obtaining a loan.
• On Amendments to Some Laws of Ukraine regarding improvement of financial services consumer rights protection registered under No. 2456-д. Its implementation will create legal grounds for interaction between individuals and both banks and financial companies according to European standards.
• On Amendments to Some Laws of Ukraine regarding specifying certain provisions on prevention and counteraction of legalization (laundering) of proceeds registered under No. 4960. Its aim is to improve internal financial monitoring of financial transactions and reduce amount of transactions subject to mandatory financial monitoring.
• On Amendments to Some Laws of Ukraine regarding consolidation of state regulation of financial markets functions registered under No. 2413а. It provides for separation of functions of the National Commission for Regulation of Financial Services Markets of Ukraine between the NBU and the State Commission for Securities and the Stock Market. it will ensure simultaneous effective supervision over banking sector and non-banking financial services market, and, therefore, new quality of financial market regulation.
• On insurance registered under No. 1797-1. The draft law is aimed at raising the level of protection of rights of insurance services consumers and improvement of control over insurance companies activity.
• On Amendments to Some Laws of Ukraine regarding regulation of peculiarities of licensing business activities related to provision of financial services registered under No. 3739. Its adoption allows to specify peculiarities of licensing business activities related to provision of financial services.
Key facts on the Council
Please note that the Financial Stability Council was established by Presidential Decree in March 2015. The Council is comprised of the Governor of the National Bank of Ukraine, the Minister of Finance of Ukraine (co-chairs of the Board), the Head of the National Securities and Stock Market Commission, the Head of the National Financial Services Commission, the Managing Director of the Deposit Guarantee Fund, the First Deputy Governor of the National Bank of Ukraine, and the Deputy Minister of Finance of Ukraine. The Council provides a forum for professional discussion of systemic risk posing a threat to the country’s financial stability. In 2016, five meetings of the Council took place. The next meeting is scheduled on end-January 2017. In early May, the Council published its first Annual Report on Activities.