Ukrainian lawmakers approve bill to strengthen central bank independence

Ukrainian lawmakers approved amendments to legislation on Wednesday to strengthen the independence of the central bank and expand its regulatory powers.

The bill is a requirement for the government to secure more loans from the International Monetary Fund under a $5 billion program, but needs to be signed by the president to come into force.

The IMF program, which Ukraine secured last year, stalled over concerns about central bank independence and the government’s efforts to tackle corruption, after the bank’s governor resigned complaining of political pressure and the constitutional court overturned some anti-corruption measures.

The new banking bill excludes the possibility of government members attending meetings of the central bank board with an advisory vote.

It increases the number of deputy heads to six from five currently.

The bill also sets clear requirements for the supervisory boards of commercial banks and gives the central bank more control over the activities, reputation and financial states of banks’ major owners, related parties and top managers.

The central bank will gain the power to demand changes of members of banks’ supervisory boards and top managers if they are not capable of ensuring financial stability.

In 2015-2017, Ukraine closed two thirds of banks, which became insolvent because of their risky non-transparent lending.

The government also nationalized the country’s largest lender PrivatBank, which had a capital gap of more than $5.5 billion.

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