A regular meeting of the Financial
Stability Council, chaired by the Governor of the National Bank of Ukraine
Valeria Gontareva with the
participation of Minister of Finance of Ukraine Oleksandr
Danyliuk, Managing Director of the Deposit
Guarantee Fund Kostyantyn Vorushylin
and other senior executives of these institutions, took place on 4 May 2017.
The meeting participants pointed to an
optimistic global economic outlook and favorable price developments in
global commodity markets. Since the beginning of the year, FX risks have
abated significantly, fiscal policy has remained prudent and inflation
developments are in line
with the NBU’s projections. However, in Q1 2017, domestic
economic conditions deteriorated slightly due to a forced blockade of temporarily
occupied territories and the suspension of trade with the
non-government-controlled areas. The adverse effect of the blockade was felt
immediately and took a toll on the economic performance indicators. Going
forward, the adverse impact is expected to weigh on
output growth and the balance of payments by the end of 2017.
The Financial Stability Council underlined
the importance of the timely implementation of reforms agreed under the IMF’s
EFF program. Delays in implementing the program may pose significant risks to
the macrofinancial stability in the medium term.
The Financial Stability Council expects
that the process of reforming the public banking sector to gain momentum in
the upcoming months. In particular, the Financial Stability Council expects
the passage of a law governing the selection process of the independent members of the SOB’s
supervisory boards. Also, the strategic principles
for reforming the public banking sector will be finalized. The Council
members pointed out that intense competition among
state-owned banks without a clear development strategy in place could
create additional financial risks.
Stability Council was established by the Presidential Decree in March
2015. The Board comprises the Governor
of the National Bank of Ukraine, the Minister of Finance of Ukraine
(co-chairs of the Board), Head of the National Securities and Stock Market
Commission, Head of the National Financial Services Commission, Managing
Director of the Deposit Guarantee Fund, First Deputy Governor of the National
Bank of Ukraine, and Deputy Minister of Finance of Ukraine. The Council provides a forum for professional
discussion of risks posing a threat to the country’s financial stability. The next meeting has been
scheduled for end-July 2017.