CHALLENGES IN REGULATION OF UKRAINIAN BANK IN THE TRANSITION PERIOD

Abstract

Abstract. Global banking system evolved over centuries, creating a solid background for
the functioning of market-driven economics and enabling faster and simpler circulation of funds
and financial instruments. Currently bank regulation and assessment of bank-related risks
emerges as a high-priority issue for Eastern Europe, particularly Ukraine due to the need for a
relatively young banking system, being the core of national economy, to account for vulnerabilities
and exposures highlighted by the Global financial crisis and prevent the collapse of existing
relations on national and transnational levels in the process of Ukrainian banking sector
transformation, which was bound to transpire after the rejection of dollar-pegging for the national
currency in February 2014. This article shall highlight the primary vulnerabilities and exposures
of Ukrainian banking system in light of recommendations voiced by the global financial
community and national economic agents in three risk segments – endogenous, exogenous and
emergency – and argue for the need to concentrate NBU’s efforts on setting up secondary channels
for information transfer within individual financial institutions and boosting the regulator’s
reputation, stimulating national business to work within legal boundaries by increasing
legislation transparency, especially with respect to taxation, monetary regulations and property
rights, as well as forge new legislation and regulatory boundaries for controlled growth of the
fund market’s importance to the national economy.
Key words: banking system, regulation, Ukraine, Basel, risk, transparency.