THE BANKING SYSTEM OF UKRAINE

The banking system of Ukraine dates to March 1991, when the Ukrainian Parliament passed the law 'On Banks and Banking Activities', determining this system as two-level, composed of the National Bank and commercial banks.

The National Bank of Ukraine is the central financial body of the state conducting a uniform national monetary, credit and currency policy, aiming to strengthen the national currency; organizing interbank settlements; and coordinating and supervising the whole banking system. Commercial banks varying in type and ownership are set up by legal entities and private persons as joint-stock companies. At present there are about 230 commercial banks in Ukraine. Two banks are state-owned (the Savings Bank and the Ukrainian Export-Import Bank), 41 banks are limited liability partnerships, 51 banks are closed joint-stock companies and the rest are open joint-stock companies. Their main functions include granting loans to businesses and individuals (backed by something valuable, like assets of enterprises, institutions, and organizations), cash transfers and payment services, currency exchange, and other banking transactions. The banking sector of Ukraine has a ramified system of correspondent accounts in foreign banks - about 3,800 accounts with 153 foreign banks, most of which are located in countries outside the CIS (Community of Independent States). Simultaneously, 91 non-resident banks operate around 1,600 correspondent accounts in Ukraine's banks. This supports the settlement of import-export operations.

Transition to international accounting and reporting standards beginning January 1,1998 was an important event for the Ukrainian banking system. It is currently adapting to the new international standards and the new reporting formats; the development and implementation of software has been completed.

Prominvestbank, Ukreximbank, Ukrsotsbank, Privatbank are the leading commercial banks in Ukraine. Of the overall number of banks, 22 are banks with foreign participation, including 6 wholly foreign-owned banks. There was founded the Ukrainian Interbank Currency Exchange which trades efficiently Ukrainian and foreign currencies and prevents significant fluctuations in the international value of the hryvnia.

To secure the banks' stability the National Bank of Ukraine resolved to increase the minimum amount of a commercial bank's own funds to one million of ECU, and an authorized stock of 3 million of ECU was set for the registration of newly established banks. Ukraine's banking strategy is to promote and stimulate commercial banks in solving economic and social problems in the country.

Vocabulary:

to strengthen – зміцнювати

settlement – здійснення розрахунків, оплата

to vary – варіюватися, змінюватися

legal entity – юридична особа

joint-stock company – акціонерне товариство

cash transfer – переказ готівки

currency exchange – обмін валют

ramified system – розгалужена система

to be located – бути розташованим

event – подія

software – програмне забезпечення

fluctuation – коливання

ECU (European currency unit) – ЕКЮ (європейська валютна одиниця)

authorized stock – номінальний капітал, дозволені для випуску акції

to solve problem – вирішувати проблему

Questions:

1. What is the National Bank of Ukraine?
2. How many commercial banks are there in Ukraine?
3. Who owns Ukrainian banks? What kinds of ownership are represented by the banks?
4. What are the main functions of banks?
5. What is a correspondent account?
6. What important event took place in 1998?
7. How does the National Bank of Ukraine secure the banks' stability?

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