Section I. GENERAL PROVISIONS
Article 1. Terms and Definitions
The terms and definitions used herein shall
have the following meaning:
“investment metals" shall denote gold,
silver, platinum, platinum-group metals affined to the highest international
standards, both in ingots and powder, provided with quality certificates, as
well as coins made of precious metals;
"banking regulation" shall denote one
of the responsibilities of the National Bank of Ukraine consisting in
establishing the system of standards which regulate banks’ activities,
determine basic principles of banking, procedures of banking supervision,
responsibility for the banking legislation violation;
"banking supervision" shall denote
the system of control and active ordered actions of the National Bank of
Ukraine aimed at ensuring the banks' and other entities, subject to the National
Bank of Ukraine supervision, compliance with the laws of Ukraine and the
established ratios, in order to ensure stability of the banking system and
protect the bank depositors' and creditors’ interests;
"currency valuables" shall denote the
material objects determined by Ukraine's laws on currency regulation as a means
of foreign exchange and financial relations;
"open market" shall denote the market
where the securities purchase and sale transactions are effected between the
persons, who are not the primary lenders and borrowers, provided that the
proceeds from the sale of securities in such market are received by securities'
holders, but not the issuers thereof. It is used by central banks for the
purposes of sale and purchase of the short-term (as a rule) government
securities in order to regulate the money supply. The investment of funds into
the national economy increases as a result of the purchase and reduces as a
result of the sale;
"currency position" shall denote the
ratio between bank's claims and liabilities in each foreign currency and in
each investment metal. If they are equal, the position shall be deemed closed,
otherwise it shall be deemed open. An open position shall be deemed short if
the amount of liabilities in the foreign currency and investment metals exceeds
the amount of claims, and long if the amount of claims in the foreign currency
and investment metals exceeds the amount of liabilities;
"monetary policy" shall denote a
complex of actions in the sphere of money circulation and credits aimed at
ensuring stability of the monetary unit of Ukraine by way of applying the means
and techniques specified herein;
“monetary liabilities” denote the currency in
circulation, financial claims to the National Bank of Ukraine except the
National Bank of Ukraine liabilities to the Cabinet of Ministers of Ukraine and
international financial organizations;
"monetary substitute" shall denote
any documents in the form of monetary objects different from the monetary unit
of Ukraine, issued by a body other than the National Bank of Ukraine and
manufactured in order to effect payments in the process of the economic
turnover, but for the currency valuables;
"foreign exchange policy" shall
denote the policy of regulating the foreign exchange rate by means of sale and
purchase of foreign currency; "discount foreign exchange policy"
shall denote the increase or reduction of the rate of interest on credits by
the National Bank of Ukraine in order to regulate the demand for and the supply
of the lending capital;
"gold and foreign exchange reserve"
shall denote Ukraine's reserves indicated in the balance sheet of the National
Bank of Ukraine, including the assets recognized as international assets by the
international community and designed for international settlements;
"creditor of last resort" shall
denote the National Bank of Ukraine, to which a bank may apply for refinancing
in case of the exhaustion of other refinancing opportunities;
"treasury bills" shall denote debt
securities issued by the state through its authorized bodies which are
distributed exclusively on a voluntary basis among the natural persons and
legal entities and testify to the funds paid in by their owners to the budget
and entitle them to obtain financial income or other property rights according
to the terms and conditions of the securities issue;
"metal accounts" shall denote the
accounts opened by authorized banks of Ukraine to register transactions with
the investment metals;
“international standards of auditing” mean the
documents adopted by the International Federation of Accountants defining the
audit standards;
“international financial reporting standards”
mean the documents adopted by the International Accounting Standards Board
determining the standards of accounting and financial reporting;
“unrealized gain/loss” shall denote the
gain/loss resulting from revaluation of the financial assets and liabilities,
monetary gold and banking metals, as well as the gain/loss resulting from
purchase of foreign currency, monetary gold and banking metals under the
condition that such transactions are conducted at a rate other than the
official exchange rate;
“discount rate of the National Bank of Ukraine”
is a monetary instrument with the help whereof the National Bank of Ukraine
sets for banks and other money market participants the range mark with regard
to the costs of raised and placed monetary funds;
“record-keeping systems” shall denote the
complex of relations on formation, processing, storage and transfer of
information between the public authorities, financial institutions and other
legal entities in the course of implementation of the state projects;
"official publication of the National Bank
of Ukraine" shall denote a special publication designated as official by
the National Bank of Ukraine and registered according to the established
procedure, where the regulations of the National Bank of Ukraine are published,
as well as informational, analytical, statistical and other materials, reviews
of the state of Ukraine's banking system, foreign exchange and financial
markets, etc.;
"official exchange rate" shall
denote the currency (foreign exchange) rate officially set by the National Bank
of Ukraine as an authorized body of the state;
“protection of valuables and establishments”
shall denote organization and practical realization by the National Bank of
Ukraine of the protection actions with regard to the appointed and pertaining
thereto buildings, structures, territories, means of transportation, currency
valuables, securities and other movables and immovables aimed at prevention or
termination of unlawful acts with regard to them, securement of their
inviolability and integrity, termination of unlawful access to them of the
third parties, as well as securement of the personal security, life and health
of the National Bank employees;
"balance of payments" shall denote
the ratio between the amount of monetary inflow obtained by the country from
abroad and the amount of payments effected by it abroad during a certain
period. The balance of payments shall include the settlements related to
foreign trade, services, noncommercial transactions, revenues from capital
investments abroad, trade in licenses, freight and service of vessels, tourism,
upkeep of diplomatic and trade missions abroad, money transfers of individuals,
payments to other countries under loans, etc. The balance of payments shall
include the capital flow: investments and credits;
“realized gain/loss” mean the gain/loss
resulting from the revaluation owing to retirement of the revalued financial
assets and liabilities, monetary gold and investment metals; " shall
denote the claims of a member country to the IMF which are defined as a
difference between the quota and IMF's holdings in the currency of the member
country less the IMF holdings received by a member country in the form of the
IMF loans and the balance on the IMF No. 2 Account, which shall not exceed 0.1%
of the member country's quota;
"refinancing rates of the National Bank of
Ukraine" shall denote the percentage commission for credits granted to
commercial banks which is established by the National Bank of Ukraine in order
to influence the money turnover and crediting;
"special drawing rights (SDR)" shall
denote the international reserve asset created by the IMF in addition to the
existing international reserve assets, which is a basket of five currencies,
whose constitution is revised every five years. The value of the special
drawing rights is determined on the daily basis;
“price stability” shall denote retention of the
purchasing power of the national currency by means of keeping in a middle-term
(from 3 to 5 years) low and stable rates of inflation measured with the
consumer price index;
“business reputation” term shall be construed
in the meaning defined by the Law of Ukraine On Banks and Banking;
Article 2. Legal Framework for Activities of
the National Bank of Ukraine
The National Bank of Ukraine (hereinafter
referred to as the National Bank) is the central bank of Ukraine, a special
central body of the state administration, whose legal status, objectives,
functions, powers and principles for organization shall be determined by the
Constitution of Ukraine, this Law and other laws of Ukraine. The city of Kyiv
is the permanent residence of the National Bank of Ukraine Council (hereinafter
- National Bank Council), Board (hereinafter - National Bank Board) and central
office.
Article 3. Authorized Capital
The National Bank
shall have the authorized capital being the state property. The authorized
capital shall amount to UAH 10 million. It may be increased by a decision of
the National Bank Council. The revenues of the National Bank budget and, if
necessary, the State Budget of Ukraine shall be sources of its authorized
capital.
Article 4. Economic Independence
The National
Bank shall be an economically independent body that shall pay the expenses for
the account of own revenues within the limits of the approved budget and, in
cases provided for hereby, at the expense of the State Budget of Ukraine. The
National Bank shall be a legal entity with separated property that is the
object of the state property right and is in the full economic competence of
the National Bank. The National Bank shall not be responsible for the
liabilities of the government bodies; the government bodies shall not be
responsible for the liabilities of the National Bank, except for their
voluntary assumption of such an obligation. The National Bank shall not be
responsible for the liabilities of other banks; other banks shall not be
responsible for the liabilities of the National Bank, except for their
voluntary assumption of such an obligation. The National Bank may open its
institutions, branches and representative offices in Ukraine, as well as
representative offices abroad. The National Bank, its institutions, branches
and representative offices shall have a seal with the Coat of Arms of Ukraine
and their respective names.
Article 5. Income and Expenses
The National
Bank shall every year compile the budget of its income and expenses, which
shall ensure exercise by the National Bank of its duties prescribed by the
Constitution of Ukraine and this Law. The National Bank shall include in the
budget of income and expenses forecasted income as well as forecasted expenses
including the depreciation expenses, reserves for depreciation of assets and
investments earmarked for ensuring the National Bank activities. The National
Bank shall represent the income and expenses, determine the profit (loss) and
compile the financial reporting in accordance with the international financial
reporting standards. The National Bank shall create the general provisions
(reserves) used to cover its losses, the revaluation reserve used to cover the
unrealized expenses as well as other reserves. In case of insufficiency of
funds in the general provisions the excess of the National Bank expenses over
its income shall be compensated at the expense of funds from the State Budget
of Ukraine for the year following the reporting one.
Article 5-1 . Profit before Distribution
Obtaining the profit shall not be the objective of the National Bank's
activity.
The National Bank shall determine the profit before distribution by
means of reduction of the profit by the amount of unrealized gain. The National
Bank shall transfer the unrealized gain to the revaluation reserve. The
unrealized gain becoming realized in the following periods shall be included in
the profit before distribution of the respective reporting periods. The
National Bank shall compensate the amount of excess of the unrealized loss over
the revaluation reserve amount at the expense of current year profit and, if it
is not sufficient, at the expense of general provisions. The National Bank
shall distribute the profit before distribution after the confirmation by the
external audit and approval by the National Bank Council of the annual
financial report in the following proportion: 50 per cent of the profit before
distribution shall be put to the general provisions and other reserves of the
National Bank. The deductions to the general provisions shall be made till the
amount thereof becomes equal to 10 per cent of the monetary liabilities of the
National Bank; 50 per cent of the profit before distribution shall be
transferred to the State Budget of Ukraine for the year ensuing the reporting
one. After formation of the general provisions in the amount stipulated by the
fifth part of this Article the profit before distribution is subject to
transfer to the State Budget of Ukraine in full.
Article 6. Main Function According to the
Constitution of Ukraine
The main function of the National Bank is to ensure
stability of the monetary unit of Ukraine. When exercising its main function
the National Bank shall proceed from the priority of achievement and retention
of the price stability in the country. The National Bank shall within its terms
of reference promote the banking system stability provided its actions related
thereto do not impede attainment of the objective established by the second
part of this article. The National Bank shall also promote sustainability of
the economic growth and second the economic policy of the Cabinet of Ministers
of Ukraine provided that it does not prevent the NBU from attainment of the
objectives determined in the second and third parts of this article.
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