The Financial Stability Council approved the updated Strategy for the Development of the Financial Sector of Ukraine and discussed systemic risks

At its regular meeting on July 19, 2023, the Financial Stability Council (FSC) approved the updated Strategy for the Development of the Financial Sector of Ukraine, the development of which is envisaged by the Memorandum of Economic and Financial Policies between Ukraine and the International Monetary Fund. The Council members agreed that the signatory institutions will hold a public presentation of the Strategy and publish it in late August 2023.

The Strategy consists of 5 chapters that contain information on the current state of the financial sector, its vision and mission, 5 strategic goals and measures for their implementation, expected results, and Ukraine’s international obligations in the financial services sector. The measures envisaged by the Strategy are conditionally divided into: short-term measures aimed at ensuring stability and preventing deterioration in the financial sector and the economy as a whole; medium-term measures that will form the basis for future economic recovery and growth.

The strategic goals of the updated strategy include macroeconomic stability, financial stability, orientation of the financial system towards the country’s recovery, modern financial services, and the institutional capacity of regulators and the Deposit Guarantee Fund.

During the meeting, the FSC members also reviewed systemic risks in the financial sector. Overall, the risks are at a moderate and controlled level, except for geopolitical risks. The war is dragging on, while assistance to Ukraine is becoming more systematic.

The global economy has managed to avoid the risks of a global recession, but economic growth in major partner countries will be slow. Global trade growth will remain low. Ukraine’s economy is gradually recovering, but remains vulnerable to security risks, and consumer inflation is declining faster than expected. Public finances are in good shape, primarily due to international support. The foreign exchange market is in a fairly stable and equilibrium state, with a comfortable level of international reserves creating a safety margin for gradual easing of currency restrictions.

The banking system maintains high liquidity and profitability. Based on the results of the ongoing resilience assessment, the NBU will develop a plan to withdraw prudential easing and further implement regulatory requirements. The priority is to introduce new capital adequacy requirements, return to the implementation of deferred measures, and resume capital buffer requirements.

For reference.
The meeting was attended by the members of the FSC: Governor of the National Bank of Ukraine Andriy Pyshnyy, Minister of Finance of Ukraine Serhii Marchenko, First Vice Prime Minister of Ukraine Yuliia Svyrydenko, Managing Director of the Deposit Guarantee Fund Svitlana Rekrut, Chairman of the National Securities and Stock Market Commission Ruslan Magomedov, First Deputy Governor of the National Bank of Ukraine Kateryna Rozhkova, Deputy Governor of the National Bank of Ukraine Dmytro Oliinyk, Deputy Minister of Finance of Ukraine for European Integration Yurii Drahanchuk, Deputy Head of the Office of the President Rostyslav Shurma, ojther heads of RFU member institutions.

The Council for Financial Stability was established in March 2015 by the Decree of the President of Ukraine and is a forum for professional discussion of systemic risks that threaten the financial stability of the state.