The National Bank of Ukraine (NBU) has insufficient authority to cover all spheres of currency regulation and quickly react to changes on the currency market. The central bank advocates the adoption of a separate law on currency regulation, Director of the open markets department at the NBU Serhiy Ponomarenko has said.
"The NBU does not have all powers to regulate the currency market. For example, our recent regulation to facilitate currency exchange transactions when we revised paper turnover, relaxed procedures and permitted banks to change the exchange rate during one day. All decisions were made by the NBU two months and a half ago, but only now we have managed to implement them. These resolutions required approval by the Finance Ministry and other public agencies participating in the functioning of the currency market," he said at the Ukrainian Corporate Treasurers’ Forum held on June 16 and June 17 in Kyiv.
Ponomarenko added that the problem with growth of the number of unlawful currency exchange points operating without any permits has not been settled for the same reason.
The official said that on one hand, the NBU does not have powers to remove these outlets, and on the other hand, the regulator understands that they are popping up all over, as there is 2% fee to the Pension Fund from currency exchange transactions.
"This 2% fee helps to put the currency market to the shadows. The NBU advocate the elimination of the fee," Ponomarenko said.
Ponomarenko presented a draft concept on liberalization of the currency regulation at the forum.
Read also: NBU will present plan of currency market liberalization
The law on the National Bank regulates the legal status and powers of the central bank, while currency regulation and supervision functions are more complex. They include several participants. It is inappropriate to describe them in the above-mentioned law, the NBU believes.
Ponomarenko pointed out the complicacy of current legislation that includes 108 legal acts regulating currency transactions.
He said that the absence of a separate law could result in the appearance of a new NBU resolution – quasi-decree.
At present the key legal act regulating the currency market is a cabinet decree on the currency regulation and supervision system dated 1993.