- National Bank of Ukraine
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- European Integration
The activities of the National Bank of Ukraine in the sphere of the European integration are focused foremost on the implementation of the EU-Ukraine Association Agreement. The implementing of the Agreement’s provisions enhances the financial services market efficiency, and ensures the approximation of the national regulatory and supervisory framework to EU rules and international standards. It also creates the prerequisites for strengthening the competitiveness of Ukrainian financial institutions and their equitable cooperation with the European institutions, as well as promotes raising the level of financial services and consumer rights protection.
To attain this goal, the NBU continuously takes steps aimed at:
The NBU’s introduction of European standards and practices promotes effective mechanisms of financial institution regulation, the improvement of supervisory approaches and the financial sector’s transparency. All of this guarantees the functioning of a stable Ukrainian financial market.
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The NBU implements the EU-Ukraine Association Agreement as a financial services regulator. We approximate Ukrainian legislation to EU law, introduce international standards, develop cooperation with the regulatory and supervisory authorities of EU member-states, and with other European institutions, in the following areas:
In order to provide information on its progress in the implementation of the EU-Ukraine Association Agreement, the NBU directly takes part in the work of the following EU-Ukraine Association bilateral bodies:
The NBU also engages in the work of other EU-Ukraine Association bodies if needed, on issues of central bank activities.
To integrate the financial market of Ukraine into the European financial space, the NBU works on enhancing the level of cooperation with the supervisory bodies of EU member states. In particular, that applies to the sphere of regulation and supervision over banks and nonbank financial institutions, as well as strengthening the interaction with the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Central Bank (ECB.
Why is European integration so important for the ordinary financial services consumer?
The introduction of the European approaches to financial market regulation enables to enhance the instruments of consumer rights and interests protection, particularly the guaranteeing mechanisms in the markets of nonbank financial services, in order to improve the stability and reliability of the financial sector. The measures taken by the National Bank of Ukraine also will promote the improvement of financial services quality, as well as the transparency of information disclosed on product terms for financial services consumers.
What are the benefits of European integration for Ukraine’s financial sector?
The EU-Ukraine Association Agreement provides the possibility for the Ukrainian financial market to obtain the status of an EU internal market upon implementation of European regulation requirements in Ukraine.
Such a regime will improve the opportunities for Ukrainian business to work in the territory of the European Union. Ukrainian banks, insurance companies and other financial institutions that are regulated and supervised by the National Bank of Ukraine could provide their services in any EU state under equal conditions with the European market players in this sector.
What is the NBU’s contribution to implementing the EU-Ukraine Association Agreement?
Even before 2016, when the provisional application of Section IV of the EU-Ukraine Association Agreement started (it regulates the establishment of a free trade zone with the European Union), the National Bank of Ukraine was working on the approximation of domestic banking legislation to European rules and standards.
At present the NBU is also focused on the gradual liberalization of capital flows, updating the framework for payment systems operation, improving the mechanisms for combatting money laundering and terrorism financing, and enhancing consumer rights protection in financial services.
Since 1 July 2020. the NBU has become the regulator of nonbank financial institutions as well. We started the active work on introducing the European rules in this sector, above all in insurance services.
The specific tasks being implemented by the National Bank of Ukraine are defined in the Action Plan on EU-Ukraine Association Agreement implementation as approved by the Resolution of the Cabinet of Ministers of Ukraine No. 1106 dated 25 October 2017.
What changes in Ukraine’s financial sector are owing to the implementation of provisions of the EU-Ukraine Association Agreement?
The main achievements are as follows:
The banking sector has been cleared of toxic and insolvent banks due to new approaches to banking supervision. Information on bank ownership structure was also disclosed, while the monitoring of bank operations with related parties was enhanced. Updated requirements to the internal control system in Ukrainian banks and banking groups, as well as an internal process of managing toxic assets management have been introduced.
A new, simple, comprehensible, and transparent regulatory framework of foreign exchange regulation is in place. The NBU eased or even canceled about 40 FX restrictions for businesses, banks, foreign investors, and households.