Ukrainian Banks Research Articles

ЕВОЛЮЦІЯ ДЕРЖАВНОГО БАНКІВСЬКОГО СЕКТОРУ УКРАЇНИ

Introduction. During the period of independence, several state-owned banks operated in Ukraine – from two in the 2000s to seven in 2013-2014 and 2024. Until 2008, the state’s share in the banking sector's assets was insignificant and amounted to approximately 6%. Since then, the share of state-owned banks has increased almost 10 times. Banks of the public sector are included in the list of critical infrastructure objects in the banking system and the list of authorized banks of Ukraine involved in work in the conditions of a special period. The purpose of the article is to determine the main trends in the development of the state banking sector in Ukraine during the period of independence. Methods. In the research process the following general scientific methods of knowledge were used, such as historical method (when studying the emergence and development of state banks in chronological order), generalization and comparison (when studying the essence of state banks, to compare the state banking sector of Ukraine and foreign countries), analysis (for assessment of the role of individual state-owned banks) and synthesis (for a generalized assessment of the share of the state-owned banking sector and the economic problems arising from it), a statistical method (in the study of quantitative indicators of the functioning of state-owned banks of Ukraine). The results. The main stages of the development of the state banking sector of Ukraine were studied: the reasons for the creation of state banks and the nationalization of private ones, the results of these decisions for the economy and the financial system, and the change state banking sector’s share in the banking system were analyzed. The place of individual state banks in the banking system by size and share of assets is highlighted. Conclusions. The main negative consequences of a high share of the state in the banking sector are summarized and the need to reform the state banking sector of Ukraine is formulated. The impracticality of privatizing the largest state-owned banks during the war has been substantiated.

ROLE OF FINANCIAL INSTRUMENTS IN ENSURING LIQUIDITY AND STABILITY OF THE CURRENCY MARKET OF UKRAINE IN THE CONDITIONS OF MILITARY CONFLICT

In the conditions of military actions, liquidity of the currency market is of critical importance for the financial stability and security of the state, which stipulates significant relevance of the issue of instruments of liquidity provision. The research aims to identify the influence of the instruments of the National Bank of Ukraine (NBU) on the liquidity of the currency market of Ukraine within the context of long-term military conflict.The methods of regression analysis, correlation analysis, and analysis of variance were used in the study to determine the leading factors that influence the liquidity of the currency market in Ukraine in the conditions of military conflict.The study of the liquidity of the currency market through the prism of linear regression reveals the relation between the core economic indicators and the level of liquidity of the currency market during the military conflict. The model with a coefficient of determination 0,774 was found to effectively describe 77,4% of liquidity variability, underlining the significant influence of such factors as central bank policies and macroeconomic conditions. Significant coefficients for central bank interventions (1,7867), regulatory measures (59,8199), volume of international aid (-1,5684) and inflation (-99,9780) indicate their influence on the liquidity of the currency market in the conditions of military conflict. The influence of regulatory measures with a correlation of 0,59 is especially important.The article emphasises the necessity for minimising dependence on external financing and inflation control through monetary measures to ensure price stability. Further study perspectives involve consideration of the influence of digital currency of central banks on the liquidity of the currency market.

STATE REGULATION OF REINSURANCE ACTIVITIES IN UKRAINE DURING THE WAR

This paper examines the evolution of state regulation of reinsurance activities in Ukraine in the period 2022-2024, with a particular focus on the impact of the ongoing conflict with Russia. This paper examines the manner in which the regulatory framework has been adapted to the distinctive challenges posed by the war in order to stabilise the insurance market and ensure effective risk management. The objective of this study is to analyse the regulatory measures and their implications for the insurance and reinsurance sectors, with a particular focus on the changes implemented, their practical results and the broader implications for market stability. The primary objective of this paper is to undertake a comprehensive analysis and evaluation of the alterations in state-level regulation of reinsurance in Ukraine between the years 2022 and 2024. The objective is to identify the regulatory changes implemented to address the distinctive challenges posed by wartime conditions, evaluate their impact on the reinsurance industry, and discuss the broader economic implications. The study aims to provide a comprehensive understanding of the manner in which the regulatory framework has been adjusted in order to maintain industry stability and ensure effective risk management in an unstable environment. Methodology. This study employs a qualitative research methodology, utilising a combination of document analysis and expert interviews. The data was gathered from regulatory reports, policy documents, and statements issued by the National Bank of Ukraine and other pertinent authorities. The analysis is centred on a detailed examination of the key regulatory adjustments, the market responses to these changes, and the practical implications of these modifications. Results. The analysis revealed several significant changes in the reinsurance regulation in Ukraine during the reporting period: 1) strengthening of regulatory supervision; 2) revision of coverage requirements; 3) state and international financial support measures and co-operation with international reinsurers to stabilise the market and manage increased risks. The regulatory changes have had several practical implications for the reinsurance sector: increased financial stability through stronger solvency and capital requirements has improved the financial strength of insurers and reinsurers, helping them to manage the increased risks associated with the conflict. Value / Originality. This paper presents a comprehensive analysis of the regulatory adaptations in Ukraine's reinsurance sector during a period of significant political and economic upheaval. The paper offers valuable insights into the effective adjustment of state regulation in response to extraordinary circumstances, thereby contributing to the broader understanding of risk management in conflict-affected regions. The study is of particular relevance in the context of the prevailing geopolitical circumstances and the necessity to comprehend the manner in which extreme circumstances affect financial regulations. The study addresses a gap in the existing literature on crisis management in the financial sector, with a particular focus on the context of war. The originality of this study lies in its focus on the intersection of war and regulatory adaptation, a topic that has been largely overlooked in the existing literature. By analysing the regulatory responses and their outcomes, the paper makes a contribution to the development of strategies for effective crisis management in the financial and insurance sectors.

Risk-based regulation and supervision of second-tier banks: experience of EU countries

The aim of the study was to determine the impact of increased capital adequacy standards of second-tier banks on their performance. The study is based on second-tier banks of EU member states, as these countries are the first to implement the Basel Committee recommendations, so their experience should be studied and taken into account when building risk-based regulation of second-tier banks of Ukraine and Kazakhstan. The study covers the period of 2009–2022, as the Basel III regulations were adopted after 2008, and they began to operate for the second-tier banks of EU member states in 2013. The study was conducted using econometric modelling with an analysis of the dependence of banking indicators on the capital structure established by Basel III. Functional interrelationships of the dependence of Net Interest Income, Profit, Return on Assets, Return on Equity, Risk Costs to Operating Income were tested. The impact of capital adequacy requirements on the performance of second-tier banks was determined: capital adequacy requirements have a positive impact on net interest income and profit of second-tier banks. The obtained results can be used to substantiate increasing capital adequacy requirements to increase the reliability of the banking system as an element in the system of factors of economic growth of the national economy.

Value-based banking as a factor of sustainable development

The banking sector is one of the drivers of economic development and is closely related to the functioning of society, the demands of which change according to its evolution. In the era of public demand for guidelines regarding the conscious conduct of business and life, the question of introducing values into banking is acute. Its transformation in the direction of introducing a personal approach and ethical principles while working with clients is being observed; awareness that the formation of close relationships is possible only on the basis of socially significant values and assessment of their impact on the environment, communities and space. That is why the implementation of a value-based approach to banking is an impor­tant and relevant topic. During the re­search, a hypothesis was put forward regarding the need to introduce value-based banking as one of the key drivers of sustainable economic develop­ment. A traditional set of methods for researching economic processes is used: ana­lysis, comparison, and logical genera­lization. The essence and basic norms of the functioning of value-based banking are revealed, the authorʼs vision is formulated. The work prin­ciples of value-based banks, defined by the Global Alliance for Banking on Values, the principles of the concept of sustainable develop­ment, the practical aspects of the implementation of value-based banking based on target, ethical characteristics in the work of individual banking institutions were studied, and on their basis, the own principles of value-based banking were formulated. The main interna­tional and domestic aspects of the functioning of banks that introduce elements of value-based banking are analyzed. It was determined that in fact all the leading banks in the world banking sphere prioritize streng­thening the principles of value banking in the near future. Banks of Ukraine are not lagging behind this process, and certain elements of value-based banking, such as corporate social responsibility, ESG prin­ciples, etc., are being introduced into their activities. The prospects of banking based on a client-oriented approach and the application of the principles of conscious business conduct are formulated.

Determining the leaders of Ukraine’s insurance market based on the adaptation of the DEA method

The escalating wartime risks in Ukraine has led to a rapid reduction in insurance coverage in life and non-life segments. The purpose of the study is to rank Ukraine’s insurance companies based on an adaptation of the DEA method to the insurance market conditions. The study utilized the Supervisory Statistics of the National Bank of Ukraine as data. The study also used ranking of insurance companies based on technical efficiency criteria. The output indicators include the profitability of total capital (Output1) and the occupied share of the insurance market (Output2). The input indicators comprise the volume of total assets of insurers (Input1), the share of equity capital in assets (Input2), the level of gross payments (Input3), and the level of payments to insurance reserves (Input4). The ranking of insurance companies is based on minimizing the distance of each from the bounds of technical efficiency by solving a set of optimization problems. Based on the modeling results, a list of market leaders (7 companies) was formed for the end of the third quarter of 2023. They served nearly 37% of the insurance market in Ukraine, accumulating 41.5% of the total assets of this financial market sector. So, the primary issue for insurance companies is the loss of solvency due to the absence of adequate levels of insurance reserves. Therefore, priority measures should include strengthening regulatory constraints in this financial market segment to facilitate its qualitative renewal.

Digitalization Management in the Corporate Banking Sector of Ukraine

Introduction. Digitalization in trendy banking services requires changing their relationships with corporate clients within the framework of an individual approach to each client in the context of the development of the latest information and communication technologies and Internet marketing. Therefore, improving the business customer service system based on innovative technologies in banks to increase their competitiveness and profitability remains relevant. Aim and tasks. This study aims to examine the trends in banks’ service of corporate clients in the context of the latest financial technology development and to determine the directions for forming a digitalization strategy in corporate banking in Ukraine. Results. The growth of corporate clients in the banking system of Ukraine in 2022-2024 became possible due to the digitalization of management and the implementation of electronic payment systems, which contributed to the growth in the number of open accounts, which increased by 27%, while the growth of remote servicing increased from 78% to 89% of business clients. The top 10 banks in Ukraine account for 75% of the funds in corporate clients’ accounts. Along with high reliability, the clients of these banks have come to value the digital services that banks provide that meet global standards. As a result of the growth in the volume of banking services provided to corporate clients in 2023 using digital technologies, the volume of fee and commission income of the Ukrainian banking system increased by 13% compared to 2022. Conclusions. The banking system of Ukraine is in the process of digital transformation that promotes the transformation of financial institutions into high-tech platforms capable of creating new algorithms for generating profit from digital technologies. Implementing digital transformation in the banking sector increases the number of banks` corporate clients and their satisfaction with banking products and services. This leads to an increase in the efficiency of banking activities and banks’ profitability through increased commission income. The forecasting of commission income of Ukraine’s banking system conducted in this study showed that further introduction of digitalization into corporate banking could contribute to their growth by at least 8% annually.

REGULATORY POLICY OF THE NATIONAL BANK OF UKRAINE: PROBLEMS AND WAYS TO IMPROVE

The article notes that the National Bank of Ukraine (NBU) must ensure price stability, high and stable level of economic development and optimal employment. Conceptually agreeing with this approach, the authors prove that the mechanism for its implementation does not ensure the fulfillment of the NBU mission. Analyzing changes in the banking sector of Ukraine over the last 2.5 years, the authors emphasize that due to the implementation of insufficiently balanced NBU regulatory policy, the volume of banks' investments in NBU certificates of deposit increased almost fivefold –– from UAH 95 billion. at the beginning of 2022 to UAH 456 billion at the end of the year. As a result of such an unsuccessful policy and contrary to economic logic, the NBU generated a huge positive liquidity balance in the banking sector, while the real sector of the economy suffers from a lack of funds Undoubtedly, such regulatory actions, which are "unique" in modern economic theory and historical practice, cannot stand criticism and should be rethought and significantly revised. The reasons and consequences of such an ineffective regulatory policy of the NBU are analyzed and important conceptual ideas aimed at improving bank management are suggested. According to the formulated conclusions, it is necessary to create an effective mechanism of credit monitoring in Ukraine. The activity of which should be devoted to assessing economically justified levels of different banking rates and analyzing innovations in the ideology of banking management that are used in other countries where central banks operate very successfully.

Legal regime of privatization of state-owned banks in Ukraine: main problems, solutions and international legal aspects

Legal regime of privatization of state-owned banks in Ukraine: main problems, solutions and international legal aspects

АНАЛІЗ ДІЯЛЬНОСТІ БАНКІВ НА ФІНАНСОВОМУ РИНКУ УКРАЇНИ

The article analyzes the activity of domestic banks in Ukraine's financial market and examines the state and dynamics of the banking system's assets, capital, and liabilities for 2020-2023. Ukraine's financial market is experiencing significant challenges due to martial law, but these hard conditions also driving radical change and innovation in the sector. Due to the specificity of their activity, banks occupy a special place in the market economy and have a significant impact on the development of the financial market and the economy of the country. The integration of the national banking system into the world financial space is one of the leading directions of economic globalization, which strengthens the requirements for domestic banking institutions to increase their competitiveness and efficiency in providing financial services. This makes it necessary to study the essence and peculiarities of the functioning of banking institutions in the financial market of Ukraine in the modern, changing conditions of the development of economic relations between subjects of the national and international economy. The trend of consolidation of the banking system and withdrawal from the market of unreliable banks or banks whose capital belongs to under-sanctioned owners has been revealed. It was determined that despite the decrease in the number of these institutions, there was no significant deterioration of the main quantitative and qualitative indicators of the bank's activity, which indicates the stability of the efficiency of their activity. The state, dynamics, and quality of the banking system's credit portfolio were studied, and banks' compliance with NBU prudential regulations regarding credit risk was analyzed. The consistently high value of 45% of the share of bank assets in GDP confirms the overall efficiency of these financial institutions. A positive thing is the reduction of NPL before the full-scale invasion, but with its onset, this indicator increased again. A characteristic feature of the activity of domestic banks at present is a significant increase in the interest of institutions in investments in securities, in particular, military government bonds, the share of investments in these securities in the total assets of banks is rapidly increasing. To stabilize the financial state of the country's economy under the influence of "force majeure" circumstances, the banking system must constantly adapt its activities on the financial market, acting as an intermediary in the circulation of capital and financial resources

Система публічного адміністрування nоргівлі валютними цінностями

The article is devoted to the definition of the system of public administration of trade in currency values, the problem of theoretical substantiation of its elements, the main types of manifestations of the administration of this sphere, the study of the subjects of the implementation of administration functions, the study of the current legislation regulating this sphere of public-legal relations. Particular attention is paid to the definition of the content of the category “trade in currency values”, the disclosure of the legal nature and features of the category “public administration”, the outline of the approaches to the definition of its content and constituent elements available in domestic science. The definition of the system of public administration of trade in currency values and its constituent elements was carried out within the framework of the instrumental theory in law. It was established that, taking into account the initial provisions of the instrumental theory, the instruments of public administration of currency trading in Ukraine should be considered the norms of the current legislation, which determine the procedure for carrying out, in particular, the licensing of this activity, its control, taxation, the application of other management measures, prohibitions in this sphere, activity and law-enforcement acts of public administration bodies that carry out such management activities are empowered to impose administrative and financial sanctions. A proper definition of the category “administration of trade in currency values in Ukraine” is proposed. It was determined that the administration of trade in foreign exchange values takes place on the basis of complexity, reasonableness, flexibility of implementation and adaptability to the conditions of application of control and other measures, the expediency of their application, and orientation towards the consistent solution of current and long-termtasks of the state’s currency policy. The peculiarities of the functioning of subjects of the administration of currency trade in Ukraine, including the National Bank of Ukraine, the Ministry of Economy of Ukraine, the National Commission for Securities and the Stock Market, the State Tax Service of Ukraine and the Cabinet of Ministers of Ukraine in general, have been determined. It was found that the main subject of the administration of the outlined spheres of public legal relations is the National Bank of Ukraine. It is he who implements administrative, regulatory, control and other instruments in the field of currency relations. At the same time, other areas of implementation of the administration are disclosed, in particular, the activity of public administration bodies within the framework of taxation procedures of the researched activity is outlined.

EFFICIENCY OF MONETARY POLICY IMPLEMENTATION AS A BASIS FOR CENTRAL BANK STABILISATION POLICY UNDER MARTIAL LAW (UKRAINIAN AND ISRAELI PRACTICES)

The purpose of the paper is to summarise and present the anti-crisis practices of a central bank during martial law in the country, based on the experience of the National Bank of Ukraine and the Bank of Israel. The research methodology is based on an analysis of reports, guidelines, statistical data, scientific articles, legislation bases, and other relevant materials. One of the methodological aspects of this study is a comparison of the knowledge acquired about the regulations implemented by the two central banks after the introduction of martial law in the countries. The objective is to identify potential lessons learned for the banking regulations of Ukraine and the State of Israel. The results of the study show that the practical implementation of stabilisation measures by central banks is crucial for achieving financial stability of the state both during and after wartime, as well as the ability to predict possible deepening of crises and minimise their consequences. The tools and methods used by these central banks differ. In particular, the NBU's main monetary policy instrument was foreign exchange interventions, while the BoI actively used the key policy rate. The proper formation of international currency reserves and the possibility of using them during a war-related crisis is critical for both countries. This fact confirms that crisis management has different types of scenarios. Each anti-crisis scenario is unique. This paper highlights the practical need for interaction between monetary and macroprudential policies of the central bank in wartime. It demonstrates various combinations of methods and instruments of the central bank's monetary policy. This study also shows the interdependence of the economies of these two countries. Practical implementation. This analysis provides insight into the anti-crisis activities of central banks during unpredictable periods in a country's life, namely, during martial law. At the present stage, banking systems do not often face the challenges of war. Therefore, studying each case is important for improving theoretical knowledge and deepening practical research. Value / Originality. The author of the study collected the experience and practices of stabilisation activities of the central banks of Ukraine and Israel during the war.

THE IMPACT OF WAR ON THE INSURANCE MARKET OF UKRAINE: ANALYSIS OF OBSTACLES AND RESTRUCTURING OF THE FINANCIAL LANDSCAPE

The purpose. The aim is to analyze the condition, structure, and dynamics of the financial sector of Ukraine, identifying key trends. It also involves determining the major problems and growth opportunities for the financial sector as a significant factor affecting the national economy. Method. The study is based on the examination of statistical and empirical data from the National Bank of Ukraine, as well as the analysis of changes in regulatory acts governing financial services. Additionally, the author reviewed expert opinions on market issues related to specific entities. Using a comprehensive approach, the author was able to formulate general trends characteristic of the market as a whole. The results. This research presents the impact of martial law on the structure and dynamics of the financial sector in Ukraine, analyzes the causes of these changes, and identifies factors influencing the financial sector of Ukraine. Scientific novelty. The scientific novelty of the article lies in exploring the relationship between military-political factors and the transformation of Ukraine's financial sector. The proposed study highlights the unique experience of the impact of military-political factors on the country’s financial system, which is relevant and significant for further research and practical applications. Practical significance. The practical significance of this article is that the research results will provide analytical information to financial institutions regarding the needs and opportunities for adapting to military-political risks. This will enable them to develop more effective risk management strategies and maintain stability in conflict conditions. Studying the impact of military-political factors on the stability of Ukraine's financial system can help identify key risks and ways to strengthen the resilience of financial institutions and national infrastructure.

Evolution of the role of the Council of the National Bank of Ukraine and the Chairman of the National Bank of Ukraine in terms of strengthening the independence of the National Bank of Ukraine

Evolution of the role of the Council of the National Bank of Ukraine and the Chairman of the National Bank of Ukraine in terms of strengthening the independence of the National Bank of Ukraine

Bank lending to business entities: 2021–2024

The current situation in the country is characterized by a high degree of uncertainty, which prompts banks to invest resources not in the development of the real sector of the economy, but in risk-free and low-risk assets, which primarily include domestic government loan bonds (DGLB) and certificates of deposit (CD) of the NBU. This situation led to the fact that lending to corporate clients on market terms was not widely distributed and largely led to the implementation of the state credit program "5-7-9", according to which the state does not fulfill its obligations to banks in a timely manner to compensate the difference between market and preferential interest rates. The aim of the research is to develop a comprehensive app­roach to bank lending to business entities, which involves the implementation of radical measures to stimulate it on a market basis in a harmonious combination with state support. А set of methods of scientific knowledge were used: comparison, analysis and synthesis, grouping, abstraction, observation, etc. Ukrainian banks are currently weakly motivated or unable to provide business lending on a market basis. This is due to the presence of the state credit program "5-7-9", which provides a number of preferences to its participants. An inhibiting factor in the development of market lending to enterprises is also the attractiveness for banks of risk-free investments in DGLB and CD NBU, for which interest rates are higher than for loans granted to corporate clients. In addition, the latter generate a high level of risks for banks during the war. A set of measures aimed at the deve­lopment of business lending on a market basis is proposed, which include: the use of risk diversi­fication tools by providing guarantees from the state and international financial orga­ni­zations, in particular the EBRD, the EIB; the imple­mentation of military risk insurance, as well as the transformation of the state credit program according to the outlined directions

Risks and profitability of business models of insurance companies

Ukrainian insurance companies are steadily moving towards the European development framework, facilitated by the adoption of a series of radical regulatory documents by the National Bank of Ukraine (NBU) concerning the super­vision of their activities based on a risk-oriented approach. This, in turn, requires insurance compa­nies to make fundamental changes to their risk management processes and substantiate their choice of a viable business model capable of ensu­ring their long-term. The aim of the article is to determine the level of risks and the related profitability of business models of insurance companies of Ukraine, as well as to develop recommendations for their transfor­mation based on proactive risk management. The research is based on the use of a set of such methods as analysis, comparison, grouping, correlation. Various methodical approaches to distinguishing the business models of insurers are revealed and their brief description is given. An analysis of risks for business models of life and non-life insurance was carried out based on the system of selected indicators. An analysis of the correlation relationship between the ratio of insurance payments to insurance premiums (dependent variable) and independent variables was carried out. Proposals aimed at imple­menting innovative business models based on proactive risk management have been deve­loped. Formulated and empirically tested hypo­theses regarding the reduction of the scale of the insurance business under the influence of the unfavorable economic situation, the war in Ukraine and the strengthening of regulatory requirements for insurers; different levels of risks are inherent in the business models of non-life and life insurers; the introduction of innova­tive business models for insurers should be based on the conceptual principles of proactive risk management

Сучасний стан банківського кредитування суб’єктів малого підприємництва сфери оборони в україні

The article examines the current state of bank lending to small businesses in the defense sector in Ukraine. An analysis of the component expenditures of the state budget in 2021–2024 has been carried out; in particular, the share of defense expenditures has been determined. It has been found that defense production requires working capital for the purchase of components, covering the gap between the advance and the need for funds, relocation of enterprises, and provision of uninterrupted/alternative power sources. An analysis of current lending programs for small and medium-sized enterprises managed by Ukrainian banks in 2023 (JSC CB “PrivatBank”, JSC “Oschadbank”, JSC “Sense Bank”, JSC “Ukrgasbank”, JSC OTP BANK, JSC “Taskombank”, JSC “KredoBank”) has been carried out. The structure and volumes of loans issued to entrepreneurs within the framework of the Affordable Loans at 5-7-9% state program during the period of martial law have been studied, and their sectoral structure indicates that the funds have been being directed chiefly to agriculture – 52%, wholesale trade – 17% and food industry – 8%. A range of problems faced by small businesses in the defense sector in the process of bank lending has been outlined, in particular: lack of contracts with the Ministry of Defense of Ukraine, the need for weapon use approval, short-term nature, obtaining permission to export weapons, high interest rates, military risks, lack of collateral property, etc. The priority measures for expanding lending to the defense sector in Ukraine by the National Bank of Ukraine, the Ministry of Strategic Industries of Ukraine, and the Ministry of Finance of Ukraine have been systematized. It has been proposed that preferential state programs for bank lending be introduced to small businesses in the defense sector. Keywords: bank lending, small business, defense sector, support program, state program.

The extraordinary events as an environment for the development and implementation of the monetary policy of the National Bank of Ukraine

The paper establishes that the extraordinary events represented by the pandemic and martial law over the past five years have become powerful catalysts for changes in the banking business. It is shown that maintaining the financial stability and defense capability of the country in the conditions of martial law are the main tasks of the NBU. It was established that due to the consistent and predictable position of the NBU, balanced monetary and regulatory policy, it was possible to ensure the stability of the financial system of Ukraine even in the difficult conditions of martial law. It has been proven that the introduction of restrictive measures is a necessary step to ensure the stability and security of the financial system of Ukraine in conditions of extraordinary events. It is shown that the banking system of Ukraine demonstrates the ability to function effectively, even in the extraordinary conditions of war, thanks to a high level of liquidity, sufficient capital and the ability to generate income. The main stages of monitoring the Monetary Policy Strategy of the NBU are proposed. It is shown that its main principles in the conditions of martial law are: preservation of the stability of the financial system and liquidity of banks; development and implementation of a monetary strategy that takes into account the peculiarities of the martial law; financial support to banks and the economy; restrictions and control on the foreign exchange market; readiness to take emergency measures; effective communication with the public and business community. Recommendations for improving the monetary policy have been developed, aimed at increasing its efficiency and flexibility, ensuring the stability of the financial system and supporting the economy in the conditions of martial law. It has been proven that a set of measures for analyzing and evaluating the effectiveness of monetary instruments, implementing changes to improve efficiency, revising target inflation indicators, analyzing the situation on the foreign exchange market, strengthening the communication strategy, conducting stress tests, coordinating with other branches of government, creating reserves and flexible mechanisms will make it possible to minimize the negative consequences of martial law and contribute to the faster recovery of Ukraine’s economy.

DYNAMICS OF THE UKRAINIAN BANKING SYSTEM’S ATTRACTION AND USE OF CASH SURROGATES

This study is devoted to the analysis of transformations in the use of monetary surrogates within the Ukrainian banking system from 2015 to 2023. Through an extensive examination of financial data, key factors driving the rising prevalence of electronic money and cryptocurrencies have been identified. This phenomenon unfolds against a backdrop of profound technological shifts and economic volatility, compounded by regulatory challenges. The findings underscore a strong interconnection between technological advancements, changes in consumer behavior, and the evolution of the regulatory framework. A notable increase in the volume of electronic money transactions, coupled with the significant expansion of the cryptocurrency market, points to a paradigm shift from traditional banking services towards novel financial instruments. Specifically, electronic money, cryptocurrencies, and digital tokens are emerging as prominent alternatives to conventional currency, offering users avenues for conducting transactions and preserving value amid economic instability. The research also provides an in-depth analysis of the regulatory hurdles confronting financial institutions and government agencies, particularly regarding adherence to anti-money laundering (AML) protocols and know-your-customer (KYC) regulations, alongside the imperative to safeguard consumer rights amid heightened cryptocurrency market volatility. Furthermore, this study addresses the potential long-term ramifications of the proliferation of monetary surrogates on Ukraine’s banking system, including shifts in conventional banking practices, potential risks to financial stability, and implications for monetary policy. Despite notable progress in the integration of new financial technologies, several unresolved challenges persist, particularly concerning the provision of adequate regulatory support for innovation while maintaining the stability of the financial system. In conclusion, this research offers a valuable contribution to the understanding of how technological development and socio-economic changes are reshaping financial systems in emerging economies, with a particular focus on Ukraine. The insights derived from this study may prove instrumental for policymakers and financial institutions as they navigate the evolving conditions and challenges of a rapidly transforming financial landscape.

Legal regulation of the powers of the Antimonopoly Committee of Ukraine to exercise control in the field of banking activity

Control is explained as a systematic verification of the implementation of laws, directives, resolutions and decrees or as state or public measures for the supervision, inspection, accounting of the activities, behavior of natural and legal persons, i.e. control is an inspection in order to ensure the reliability and legality of the actions specified and the process of tracking the actual implementation of plans. Unfortunately, the legal reference literature and the current legislation of Ukraine do not contain a unified approach to the definition of the legal content of the term «control». The Encyclopedia of Law, for example, defines «control» (French controle – check, from Old French contre-role – a list with a duplicate for verification) – as verification of the implementation of laws, decisions, etc. The article examines the place of the Antimonopoly Committee of Ukraine in the system of bodies exercising control in the sphere of banking activity. It is determined that state control is one of the main functions (forms, methods) of public administration. The degree of efficiency of state control, despite the sphere of its implementation, is mainly determined by the quality of legal support of control activities, a certain level of socio-economic and logistical support of state control bodies, the level of mobility and balance of the system of control bodies. It is the balanced construction of the system of state control bodies that is an important prerequisite for the successful functioning of the entire system of state bodies. Analyzing the variety of laws and by-laws, as well as scientific literature on the issue of subjects of control in the sphere of banking activity, it is determined that control over the activities of banking institutions is a complex system, which has two main directions: external control and internal control. Subjects of banking control can be represented both externally (by state and independent regulatory authorities) and internally. The subjects of banking control by the state include: the Accounting Chamber of Ukraine, Control Departments under the Administration of the President of Ukraine, the State Financial Inspection of Ukraine, the Ministry of Economic Development and Trade of Ukraine, the National Bank of Ukraine, the State Fiscal Service of Ukraine, the State Treasury Service of Ukraine, the State Property Fund of Ukraine, state extra-budgetary funds (such as the Pension Fund of Ukraine), the National Securities and Stock Market Commission, law enforcement agencies and others in accordance with the current legislation. Independent audit firms act as subjects of independent control, and the subjects of internal control are the Supervisory Board, the Audit Commission, the Management Board (Board of Directors), functional divisions of the bank, and its internal audit service. The article thoroughly covers the functions of the Antimonopoly Committee of Ukraine of control in the sphere of banking activity, its important role and importance. The article defines the main functions assigned to the Antimonopoly Committee of Ukraine by the current legislation of Ukraine. On the basis of the study, it is established that in case of violation of the current legislation, material and operational-economic liability is provided for business entities in general, and banks in particular. When writing the article, on the basis of the studied material, it is established that the common type of operational and economic sanctions applied by the authorities are: cancellation of licenses and termination of foreign economic operations. And in case of abuse of monopoly position in the market, the Antimonopoly Committee of Ukraine has the right to adopt a resolution on the forced division of monopoly formations.