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The National Bank of Ukraine (NBU) has made public its proposals on the legislative changes needed to introduce a liberal model of currency regulation, which would then be submitted to the National Reform Council, according to the regulator's statement.
The NBU plans to discuss the proposals with representatives of businesses, banking sector, expert community, and government agencies over the next three weeks.
"The proposals of the National Bank, taking into account reservations we will see, will be presented at the National Reform Council," Deputy Governor of the National Bank of Ukraine Oleh Churii said in a statement. "We hope that our vision of the steps necessary to move to a liberal model of currency regulation will be supported by the National Reform Council," he added.
The NBU also mentioned a new model of currency regulation concept, as well as a road map for its introduction, released on December 1, 2016.
The concept provides for the freedom to conduct forex transactions on the principle of "everything is permitted that is not directly prohibited." This means that any forex transactions between residents, as well as those between residents and non-residents, in foreign and national currency, can be carried out without restrictions.
Read alsoNBU simplifies terms of Eurobonds purchase by banksAccording to the National Bank, under the new model of currency regulation, market instruments should prevail over administrative (anti-crisis) measures. The liberalized capital movement regime implies the absence of forex restrictions and therefore requires no forex control as a tool to monitor compliance.
In accordance with the NBU proposals, after the adoption of the law on currency by the Verkhovna Rada of Ukraine, the National Bank will require a six-month transition period to synchronize its normative and legal acts with the norms of the law. Following that, the law will come into force.
Read alsoNBU to ease forex restrictions for banksAs UNIAN reported earlier, the NBU in 2016 introduced a new model of forex regulation concept. The regulator planned to file the first draft law as part of it in the second quarter of 2017. The new model is not only more liberal than the current model, but also in line with the EU Directive 88/361/EEC on the free flow of capital and the Ukraine-EU Association Agreement. The model assumes a gradual easing of the forex regulation in three stages: lifting restrictions on export-import transactions and foreign direct investment, removing restrictions on portfolio investments and debt capital flows, as well as the elimination of all obstacles to the financial transactions of individuals abroad. The new law will be based on the framework law on foreign currency, which will determine the basic principles of currency regulation, while specific norms will be represented as by-laws.