On August 18, 2016, the
Council for Financial Stability held its regular meeting chaired by Minister of
Finance Oleksandr Danyliuk. The meeting was attended by Head of the
National Bank Valeriya Gontareva, heads of the national commissions
regulating the financial market Tymur Khromaev and Igor Pashko as
well as by managing director of the State Deposit Fund Kostiantyn Vorushylin.
The members of the Council
mentioned positive trends in the economic recovery of Ukraine. The GDP growth
is speeding up, inflation stays within expected limits, the amount of
citizens’ bank savings is on the way of growth as well.
The meeting participants also
emphasized that cooperation with the IMF must be resumed as fast as possible to
make these trends irreversible. They also discussed the importance of
transferring the profit of the National Bank to the state budget of Ukraine,
which is crucial for its successful execution. Valeriya Gontarevareassured
the meeting participants that the National Bank is absolutely ready to transfer
its profit for 2015 amounting 38.164 billion hryvnas to the state
budget. To make it, though, the Council of the National Bank must be appointed
which is authorized to approve the financial report of the National Bank.
The meeting participants also
discussed the resumption of credit supply for the economy of Ukraine in 2017.
Presently, this is impossible due to the inoperable judicial system, missing
regulations enhancing the rights of creditors as well as high debts of most of
big companies. The Council members criticized the low effectiveness of law
enforcement agencies in challenging the shareholders and top managers of bankrupt
banks. The common practice of the State Enforcement Service selling pawned
property at significantly reduced prices requires special attention as well.
Another issue discussed at the
meeting was the necessity to enhance the financial and institutional capacities
of the State Deposit Fund. The National Bank and the Ministry of Finance of
Ukraine expressed their readiness to provide financial support to the State
Deposit Fund, should run out of funds to pay compensations to savers at
bankrupt banks. The National Bank’s opinion is that the need for additional
funding related to this issue will be minimal. The Council members agreed that
the priority of the State Deposit Fund in the coming years should be the sale
of assets. They proposed to discuss the strategic issues related to the further
reform of the deposit insurance system at the next meeting of the Council in
October.
The Council for Financial
Stability stressed the necessity to adopt a law which should change the
appointment principles of the supervisory boards at state-owned banks. Most
members of the supervisory boards should be independent individuals selected in
a contest procedure. It was also stressed that the steps stipulated in the
Development Strategy for state-owned banks must be implemented in full scope.
Council for Financial
Stability: key facts
• The Council for Financial
Stability was created in March of 2015 according to a Presidential decree;
• The members of the Council
are the Head of the National Bank, the Minister of Finance (co-chairpersons),
the Head of the National Securities and Stock Market Commission, the Head of
the National Commission for the State Regulation of the Market for Financial
Services, the Managing Director of the State Deposit Fund, the Deputy Head of
the National Bank and the Deputy Minister of Finance;
• The Council is a platform
for professional discussions about system risks affecting the financial
stability of Ukraine;
• The Council held 4 meetings
in 2016;
• The next meeting of the
Council is scheduled for October 2016;
• In the beginning of May
2016, the Council published its first report.
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