NBU to ease access to Ukraine's debt market for foreign investors
MOSCOW. March 27 (Interfax) - The International Monetary Fund's (IMF) updated program for Ukraine includes a number of National Bank of Ukraine (NBU) measures to develop the infrastructure of the country's financial markets and oversight of them.
These reforms will help ensure that the financial system is ready to support economic recovery, Ukrainian media reported, citing IMF materials published after the third review of Ukraine's fulfilment of the program.
The Ukrainian authorities intend to bring the country's regulations in line with international standards for property valuations and propose a roadmap by the end of March to strengthen infrastructure in this area. They also plan to prepare a proposal by the end of March to increase the transparency of the real estate market, including with the introduction of a publicly accessible database of real estate transaction prices with residential and commercial property price indexes.
The financial authorities also plan to propose priority actions for enhancing capital market infrastructure by the end of April to make it easier for foreign investors to directly access marketable debt instruments. The NBU intends to prepare a comprehensive strategy by the end of May to support the development of lending, taking into account financial stability and fiscal risks.
The next step will be to prepare an initial draft law establishing a fully functional military insurance system by the end of June, and amendments to the law on banks and banking to take into account supervisory observations in the recognition of banks' related parties.
By the end of July the NBU intends to prepare a concept note setting out steps, conditions and timing needed to introduce and develop the derivative financial instruments market, including forwards, which will help hedge foreign exchange and interest risks and improve monetary transmission.
Also by the end of July, there are plans to prepare a concept note on regulatory requirements for person to person (p2p) and other such electronic payments with the aim of identifying and restricting "abnormal behavior", as well as propose an oversight system that factors in the specific risks of banking services.
The next step will be to prepare a concept note by the end of August for a supervisory risk assessment methodology for providers of payment services and to implement the methodology by the end of December 2024.
By the end of September, there are plans to propose ways to strengthen requirements for auditing companies and audit reports and prepare a roadmap for their introduction.
By the end of November, there are plans to develop strategies for the Ukrainian Financial Housing Company and Export Credit Agency.
The NBU also plans to prepare and implement a supervisory risk assessment methodology to inform supervisory engagement priorities by the end of December. This is a structural benchmark for the IMF program.
The updated memorandum with the IMF also states that the NBU and National Securities and Stock Market Commission (NSSMC) will prepare an update of legislation for virtual assets with IMF technical assistance and in consultation with IMF staff by the end of December, as the current legal framework could pose risks to price stability.
The updated memorandum also recognizes the growing importance of banks' hybrid business models, specifically Banking-as-a-Service (BaaS), a model in which banks integrate their digital banking services directly into the products of other non-bank businesses. The NBU, in consultation with the IMF, will propose a supervisory framework that will incorporate the specific risks of such business models based on international best practices by the end of July.
The NBU also intends to increase capital requirements for payment market participants aligned with the EU payment services directive (PSD2, 2015/2366) and international good practice by the end of June.
The NBU will also prepare a supervisory risk assessment methodology by the end of September that distinguishes between the types of non-bank financial institutions (NBFI) with the aim of transitioning to a risk-based supervision approach for NBFIs.
The NSSMC will prepare draft regulation for financial intermediaries by the end of December, which will bring their capital requirements in line with EU law.