Ukrainian Banks Research Articles

Поселення колишніх військовослужбовців у сільських громадах Правобережної України після реформи 1861 року.

In the second half of the XIX century. the Russian army, which by that time had already become a social institution, formed a separate social status of the military throughout the empire, in particular on the territory of Ukraine. Its representatives were endowed with certain rights and privileges compared to other categories of citizens of the country. After the reform of 1861, significant social transformations took place in the Russian Empire. Previously settled peasants acquired civil rights and now independently solved problems related to the life of their own communities, in which they all had equal rights. That’s why settlement in their communities of representatives of the military state, who enjoyed the privileges granted to them, needed state regulation, which became the subject of this study. The purpose of the article is to highlight, on the basis of available scientific works, as well as archival materials, the conditions under which servicemen of the lower ranks of the imperial army, who were demobilized or received a long indefinite leave, had the right to settle and live in rural communities that had come out of serfdom. The methodological basis of the research was the principles of historicism, objectivity and scientificity. The implementation of these principles is complemented by concrete search, cognitive, historical and analytical methods. Scientific novelty is determined, first of all, by the formulation of a problem that has not yet been comprehensively investigated. Conclusions. The representatives of the military state, which was finally formed in the Russian Empire during the first half of the 19th century and had a significant influence on the Ukrainian lands, were mainly of peasant origin. Therefore, at the end of a long term of service, or during indefinite leave, they tried to return to the way of life they were familiar with before the start of military service. However, such categories of servicemen still differed in their legal status from the peasantry, which after the reform of 1861 acquired civil rights. Most peasant communities on the Right Bank of Ukraine were still in the status of temporarily obliged and still performed certain duties in favour of the landlord. Retired servicemen and soldiers on indefinite leave had the right not to perform these and a number of other duties. This circumstance distinguished servicemen who settled in peasant communities from the general mass of their inhabitants.

Subjects of financial monitoring of cryptocurrency circulation in Ukraine and their powers: financial and legal aspect

The article proves the relevance of studying the subjects of financial monitoring of cryptocurrency circulation in Ukraine and their powers. Based on the analysis of scientific developments on the outlined issues, the author substantiates the absence of systematic scientific developments on the outlined issues.
 The purpose of the article is to substantiate proposals for clarifying the subjects of financial monitoring of cryptocurrency circulation in Ukraine and their powers.
 The author clarifies the classification of subjects of financial monitoring of cryptocurrency circulation. According to the first criterion, «level of financial monitoring», the law distinguishes between subjects of general monitoring (the State Financial Monitoring Service of Ukraine, the Ministry of Digital Transformation, the National Bank of Ukraine, the National Securities and Stock Market Commission) and internal monitoring (banks, insurance and other financial institutions, exchanges and other participants in the virtual asset market, and individuals).
 According to the second criterion, «time of conduct», financial monitoring of cryptocurrency circulation is divided into preliminary, current and subsequent, and the subjects of these types of financial monitoring are identified accordingly.
 Based on the results of the study, the author suggests that the Law of Ukraine «On Prevention and Counteraction to Legalisation (Laundering) of Proceeds of Crime, Terrorist Financing and Financing of Proliferation of Weapons of Mass Destruction» should be amended to provide for the division of subjects of financial monitoring of cryptocurrency circulation not by types of virtual assets, but by levels of such monitoring (general, internal), and also depending on the time of its conduct (preliminary, current, subsequent). When improving this Law, it is advisable to: define the mechanism for financial monitoring of cryptocurrency circulation, which should cover the entirety of the specified types of virtual assets; specify the powers of the subjects of each type of financial monitoring.
 The author concludes that, taking into account the novelties of legislation and the author’s own proposals, it is advisable to include a separate set of such entities as subjects of financial monitoring of cryptocurrency circulation in Ukraine, which is the scientific novelty of this study. At the same time, as a direction for further research, it is necessary to note the development of a model for financial monitoring of cryptocurrency circulation, taking into account important developments of the European experience in this context.

ДИДЖИТАЛ ТРАНСФОРМАЦІЯ БАНКІВСЬКОЇ ДІЯЛЬНОСТІ В УКРАЇНІ

Introduction. The article is devoted to studying the essence of the digital transformation of banking in Ukraine, key trends, and changes in the market arising from the digitalization of banks' products and services, including changes and trends under martial law.
 The purpose of the article. The article aims to study the current trends and prospects of digital transformation of banking in Ukraine, particularly under martial law.
 Results. The authors consider an approach to defining the main aspects of the essence of "digital transformation" of banking institutions in the context of comparison with "digitization" and "digitalization".
 The authors analyze the main trends in the digital transformation of banking activities in Ukraine and identify significant market changes resulting from the digitalization of banking products and services.
 The authors also consider the critical steps of the National Bank of Ukraine as a market regulator concerning digital transformation. In particular, the authors analyze essential legislative changes that contribute to developing the digital transformation of banking in Ukraine.
 The authors also showed that digital transformation is one of the drivers of the banking market development, which creates an urgent need for banks to modernize their business strategies with a focus on digitalization.
 Conclusions. It is concluded that today, the use of innovative technologies in banking significantly changes the payment infrastructure. Despite the daily challenges and threats, the Ukrainian market shows significant steps and prospects in using and developing financial technologies and innovations. Therefore, for traditional banking institutions to remain competitive in the market and provide services that will meet customers' growing needs, banks need to completely rethink their business strategy with a focus on digital transformation.

RESEARCH OF INNOVATIONS IN THE BANKING SECTOR OF FOREIGN COUNTRIES AND THE POSSIBILITY OF THEIR IMPLEMENTATION IN UKRAINE

The article reveals the peculiarities of the functioning of the domestic banking system and examines the latest innovative solutions in the banking sector of the leading countries of the world for the period from 2020 to 2024. The prerequisites for the most popular innovative solutions and ideas in the context of the COVID-19 pandemic are revealed. The author analyzes the situations that have contributed to instability, including the constant interference of cybercriminals and Russia's military actions against Ukraine.
 The author systematizes the main directions of development of innovations in the global banking sector and analyzes the possibilities of implementing the most promising ones in the functioning of Ukrainian banking institutions and ensuring their financial security.
 The author presents the signs and criteria of innovation and provides examples of an innovative approach to solving issues in the internal processes of banking activities. It is determined that the main features of banking innovations are: the presence of social and economic results, reduction of banking costs, reduction of banking risks, increase in the level of liquidity of banking institutions, the presence of unique consumer properties, globalization of banking institutions and increase in labor productivity in the banking sector. The author studies the trends of transformations in the digital component of the banking sector. Innovations in customer experience and marketing innovations in the global banking sector are analyzed.
 The main directions of development of the banking sector in the context of leading banking institutions are structured, direct ideas and solutions to modern economic challenges of both global and local scales are presented. Innovations in the internal processes of banking institutions in 2020-2023 in Poland, the USA and Spain are revealed.

THE ACTIVITIES OF INSURANCE COMPANIES UNDER MARTIAL LAW AND THEIR ROLE IN THE POST-WAR RECOVERY OF UKRAINE

The article analyzes the current state of activity of insurance companies, which is formed under the influence of crisis trends of recent years: the Covid-19 pandemic and quarantine restrictions, a full-scale invasion of the russian federation and mass damage. The extent of the damage to the Ukraine’s economy and the needs for recovery have been analyzed, which will include special support and mobilization of the private sector, as well as necessary costs for the recovery of housing, social infrastructure, energy and transport. It is noted that the downward changes in the number of companies do not have a negative impact on the quality of services provided and the penetration of the insurance market, as these trends may indicate changes in the insurance market and its adaptation to new conditions, reflecting the impact of changes in the economy as a whole, the regulatory environment and demand for specific types of insurance products. It has been determined that in the future, the number of lawsuits under military policies from the ships damaged by sea mines, missile attacks and bombings in the conflict zone in the Black and Azov seas, as well as under private contracts, will increase in the activity of insurance companies. The structural changes in the insurance market and the factors that caused them are analyzed, as well as the trends of changes are given. It has been proven that in the conditions of martial law, the issue of war risk insurance possibilities is quite natural. The possibilities of introducing a fully functional military risk insurance system in Ukraine, which is provided for by the Memorandum on Economic and Financial Policy between Ukraine and the IMF, have been studied. This concept was developed with the participation of specialists from the World Bank, the National Bank of Ukraine of Ministry of Finance and the Ministry of Economy of Ukraine, which is positive for the progressive development of the insurance market of our country in the direction of adaptation to EU standards. A comprehensive analysis of the insurance products of the leading Ukrainian insurers, which provide protection against war risks, was carried out. Prospects for the introduction of new insurance products that will meet the needs of society have been determined. The most promising is the implementation of the effective measures for the proper insurance of investments against war risks, which can contribute to the attraction of funds for the reconstruction of the country, the relocation of enterprises, the organization of high-tech production and services, the creation of new jobs, the adoption and application of innovative experience, an increase in the level of income and an increase in income to state.

FORMATION OF THE INCOME PART OF THE STATE BUDGET OF UKRAINE UNDER THE CONDITIONS OF THE MARITAL STATE

The article describes the peculiarities of the implementation of the state budget on revenues during the period of martial law. The problems caused by russia's armed aggression in relation to Ukraine’s budget policy are outlined. It has been found that in fact, the need for financial assistance is provoked by the growth of the military expenses, since the revenue part of the budget is approximately the same as the expenses for the Ministry of Defense alone. The structure of losses in the economy and trends in GDP changes are analyzed. It is noted that in the general the picture of the economy of our country, state expenditures occupy an increasingly large volume. As in the previous year, the largest item of budget expenditures in 2023 is security and defense; at the same time, expenditures directed at it compared to the pre-war period have increased almost tenfold. The structure of the economy for 2022-2023 has undergone significant changes, the share of industries with a high tax rate has decreased, which negatively affects the level of tax payments from the economy. It was revealed that in 2023, as a result of the policy of the National Bank of Ukraine (hereinafter – NBU), aimed at maintaining a relatively high discount rate, the profits of the banking system exceeded pre-war indicators several times, which allowed it to obtain a significant positive financial result. It was noted that a significant part of the state budget revenues was earned by the fuel and energy sector, which, despite the war, continues to be a successful component of Ukraine's economy. When forecasting the revenues of the state budget, one should take into account the high degree of uncertainty and unpredictability, which affects the high probability of deviation of the actual figures of the estimate from the planned ones. The main key risks can be called the continuation of the war and the uncertainty regarding the further ways of its development, non-return of refugees from abroad, insufficiently fast implementation of the reforms; lack of assistance from international organizations and governments. The latter is not a convention, but a fact, because the key source of income in 2024 will be external borrowing, since the country's own resources (tax and non-tax revenues, transfers) should be enough to finance only half of the expenses. In fact, the need for financial assistance is provoked by the growth of military expenses, and the budget is written in the form of loans.

SCIENTIFIC APPROACHES AND KEY ASPECTS OF THE MODEL OF IMPLEMENTATION OF INNOVATIVE TECHNOLOGIES IN THE PRODUCTION MANAGEMENT SYSTEM OF INDUSTRIAL ENTERPRISES

Objective. To study and analyse various scientific methods and approaches to the introduction of the latest technologies into the production processes of industrial enterprises and to develop an effective model of innovative technologies. Methods. The following methods were used to achieve the goal and solve the above tasks: data analysis and synthesis - the article analyses various data, including sociological surveys, economic forecasts of the National Bank of Ukraine, and other important indicators; comparative analysis - comparing the current situation with previous years to assess economic recovery; comprehensive review and strategic analysis - describing the strategic directions of innovative transformations and industrial development, as well as considering the main models of innovation; forecasting. Results. The importance of introducing digital technologies in the management of industrial enterprises is substantiated, the contribution of enterprise resource planning systems and analytical tools to responding to market changes and optimising supply chains is emphasised. The necessity of an integrated approach to the introduction of innovative technologies in industrial management in Ukraine, taking into account the specifics of the enterprise, organisational culture and existing technological processes, as well as the need for continuous evaluation and optimisation of innovations, is determined. Scientific novelty. A model for the introduction of innovative technologies into the production management system of industrial enterprises has been developed, which allows for the comprehensive integration of modern innovative technologies with traditional management practices. This model helps to optimise production processes, increase the efficiency of enterprises and ensure their competitiveness in the global market. The article also proposes a comprehensive approach to studying the impact of innovation on the industrial sector in post-war Ukraine, taking into account internal and external factors affecting innovation processes, and focusing on the role of technological innovation for the country's economic recovery. Practical significance. The results of our study can be used to develop strategies and methods that can be applied in various areas of economic and industrial activity in Ukraine, especially in the context of recovery from the military conflict. The main areas of application include the industrial sector, economic policy and planning, and enterprise resource management. The article emphasises the importance of applying modern management approaches and digital technologies in the process of enterprise resource management, which can be useful for managers at all levels and can contribute to further research in the field of innovative development and management activities in industry, in particular in the context of digital transformation.

Smart technologies in banking

The article is aimed at the current issues of using smart technologies and innovative approach during evolution and transformation processes in banking. The study identifies the special place of this topic for achieving a high level of efficiency and competitiveness of banks and characterizes the impact of the introduction of technological approaches on the customer base and its perception of banking products. The main functions of banking innovations in this area are analyzed and the justification of their feasibility at the present stage of economic development is provided. A number of the most promising technologies and approaches to banking activities are allocated, namely: contactless payment, digital wallets, biometric identification, person-to-person payments, collective financing, omnichannel banking, interaction with FinTech companies, blockchain, big data, artificial intelligence, smart machines, Internet of Things, behavioral banking, retail bank, application programming interfaces, multi-component bank, open banking, augmented reality, robotic automation, hybrid clouds. The relevance of the identified areas is proved based on their perception by analyzing the popularity of the identified topics in Google search queries using the Google Trends tool. The perception of smart technologies in banking by Internet users in the world and specifically in Ukraine is investigated, which gave grounds to conclude that there is a significant interest in them, and therefore the expediency of further study and implementation in the activities of banks. It is identified that the most perspective technologies are biometric identification, blockchain, Internet of Things, big data analysis, artificial intelligence, etc. Several technologies have been identified, namely, collective financing (crowdfunding), application programming interfaces (APIs) and digital wallets, which are less popular in Ukraine than in the world in general, and therefore require detailed research and study of the relevance of their application in the domestic banking market. Possible directions for further innovative development of banking institutions based on the use of smart technologies are proposed. Based on panel data for 60 banks of Ukraine for the period 2014-2022, the author analyzes the correlations between the indicators of the use of digital technologies and the financial performance of banks and builds regression dependencies of financial indicators of banks on the indicator of the number of electronic means of payment in active circulation. The theoretical value of the study is to identify the most promising smart technologies and innovative approaches to banking business in modern conditions. The practical value lies in studying the level of perception of high-tech innovations in the field of banking services by the active public and identifying further directions for the development of this process. We consider it advisable to direct further research in the context of a detailed study of the possibilities of applying the identified technologies in specific banking products or business processes.

THE IMPACT OF INFLATION TARGETING ON ENSURING ECONOMIC STABILITY

The article provides an analysis of the dynamics of changes in the monetary policy of modern Ukraine. The importance of inflation targeting in the history of Ukraine is global and significant. At this stage, Ukraine uses a managed exchange rate flexibility regime, which is a direct descendant of the exchange rate targeting regime, but this solution is only temporary. In the future, it is the regime built on inflation that will play a key role in the development of a prosperous Ukraine, being the main policy of the National Bank of Ukraine, but the significance of this process is somewhat lost against the background of the country’s socio-economic transformations, which only emphasizes the significance of this analysis. The return to this regime must be gradual and with the rejection of the exchange rate fixation, even in a flexible form, which seems impossible today. Despite this, such a refusal is part of the central bank’s strategy, so it is extremely important to focus attention and analyze such a transition.

Business Models of Ukrainian Banks: the Impact of the Revolution of Dignity, the COVID–19 Pandemic, and Russia’s Military Aggression

The purpose of the article is to identify key banking activity models in Ukraine and show how they changed under the influence of the Revolution of Dignity, the COVID–19 pandemic, and the imposition of martial law. The proposed method uses cluster analysis of the main indicators for banking activity (concerning assets, liabilities and income) based on Ward’s agglomerative hierarchical clustering algorithm and the Tau index in the NbClust package as the criterion for evaluating the optimal number of clusters. The research covers all Ukrainian banks, spanning the period 2013–2022. In 2014 (after the Revolution of Dignity), the actions of the National Bank of Ukraine (NBU) had a positive impact on the models of Ukrainian banks: there was no opaque model of banks and banking models became more transparent and more resilient to financial shocks. Between 2021 and 2022, five banking models were identified: universal banks, wholesale funding banks, corporate‑investment banks, retail banks, and commission banks. The negative impact of COVID–19 on the Ukrainian economy was reflected in all banking models by the following: (1) a significant increase in the role of securities in assets, which was caused by a decrease in lending due to an increase in their riskiness; (2) the use of central bank funds to liabilities management, which was evidence of a deterioration in financing conditions in the deposit market. The following main changes in Ukraine’s banking system at the end of 2022 (during the war) were identified: (1) a decrease in the number of banks that mainly use funds from the NBU to support their activities; (2) the closure of only four banks by the NBU (including two with majority shareholders from Russia) during the year; (3) an increase in the share of the non‑government debt securities portfolio in banks’ assets; (4) declines in ROE and ROA for all banking models during the war, and three banking models became unprofitable; (5) the significantly higher share of non‑performing loans in the credit portfolio for all banking models, especially for the retail banking model. The value‑added of this research is the analysis of how banking models in Ukraine have changed at the micro level (reflected in the financial statements) inter alia in wartime.

ОСОБЛИВОСТІ ФУНКЦІОНУВАННЯ ВАЛЮТНОГО РИНКУ УКРАЇНИ В УМОВАХ ЕКОНОМІЧНОЇ НЕВИЗНАЧЕНОСТІ

In the era of globalization and the advancement of information technology, Ukraine’s foreign exchange market encounters economic uncertainty, particularly amid efforts to overcome the repercussions of the COVID-19 pandemic and the challenges posed by a full-scale armed invasion by Russia. This situation introduces a range of short-term and long-term obstacles, notably disrupting established trade routes and supply chains, impacting the balance of imports and exports, and placing significant strain on the foreign exchange market among other areas. This article aims to analyze the current peculiarities of the domestic foreign exchange market’s operation amidst economic uncertainty, focusing on the impact of governmental and regulatory actions on its dynamics, especially throughout 2022-2023. It delves into the regulatory measures enacted to stabilize the foreign exchange market under martial law conditions. The National Bank of Ukraine (NBU) has implemented several countermeasures in response to these challenges, including covering 37% of the currency supply, which resulted in a reduction in daily transactions and an enhanced role in market equilibrium. The measures also include restrictions on capital transactions and the facilitation of international assistance to satisfy foreign exchange demands. The future outlook of the foreign exchange market is contingent upon economic recuperation, foreign investments, macroeconomic policies, geopolitical risks, and regulatory frameworks. The significance of domestic reforms and international support is underscored as pivotal. It is also noted that global economic tendencies will influence Ukraine’s foreign exchange market in the aftermath of the conflict. This study is aimed at providing insights for professional analysts of the foreign exchange market, governmental bodies, and international financial institutions. Future investigations will explore the implications of the NBU’s policies on the foreign exchange market and their potential to foster economic recovery in Ukraine amidst prevailing challenges and threats.

INFLUENCE OF MONETARY POLICY ON DEVELOPMENT OF THE BANKING SYSTEM OF UKRAINE

The article is dedicated to the current issues of the impact of monetary policy on the development of the banking system of Ukraine in times of war. The main trends in the use of monetary policy instruments, such as changes in the discount rate, are considered, and the dynamics of capital adequacy ratios of domestic banks during wartime are analyzed. The activities and role of the National Bank of Ukraine in stabilizing the banking system during wartime are investigated. In practice, the National Bank of Ukraine has implemented a series of proactive measures to ensure the stability of the banking system. It is determined that there is an acute need to implement additional financing channels or expand credit programs through the use of preferential interest rates, compensatory instruments, guarantee resources to support veterans, relocation, land demining, energy efficiency, exports, and the processing industry.

How to conduct monetary policies. The ECB in the past, present and future

We study the evolving operating procedures used by the ECB since its creation. During the period up to 2015, bank reserves were scarce and the ECB, like other central banks, used a corridor system in which the money market rate could fluctuate within the bounds set by the lending and the deposit rates. With the start of Quantitative Easing (QE) the operating procedure evolved into a regime of reserve abundance. This regime has become problematic since the inflation surge forced the central banks to raise the policy rate. The result has been a massive transfer of central banks’ profits (and more) to the banks. We propose a two-tier system of reserve requirements that would only remunerate the reserves in excess of the minimum required. This would drastically reduce the giveaways to banks, allow the central banks to maintain their current operating procedures and make monetary policies more effective in fighting inflation.This paper was presented at the ECB@25 Symposium at Erasmus University, Rotterdam on 16th January 2024. We are grateful to Mary Pieterse-Bloem, Sylvester Eijffinger, Casper de Vries, Charles Goodhart and other participants in the Symposium for comments and suggestions. We also profited from comments and suggestions of an anonymous referee.Previous versions of this paper (De Grauwe and Ji, 2023a, 2023b) profited from comments by Ignazio Angeloni, Peter Bofinger, Robert Holzmann, Pablo Rovira Kaltwasser, Karel Lannoo, Vivien Lévy-Garboua, Anna Lozmann, David Marsh, Wim Moesen, Joachim Nagel, Theo Peeters, Stefan Schmitz, Miklos Vari, and by participants in seminars and presentations at the London School of Economics, King’s College (London), the Bundesbank, the Central Bank of Luxembourg, OMFIF, Sciences Po (Paris), the Austrian National Bank, SUERF, the Polish National Bank and the National Bank of Ukraine.

DEVELOPMENT OF FINANCIAL RISK HEDGING STRATEGIES

The purpose of the study is to develop the theory of hedging, generalize approaches to the formation of effective risk hedging strategies, and provide recommendations for the implementation of international banks' experience in Ukrainian practice. It is proved that in the process of choosing effective strategies, it is advisable to distinguish three types of financial risk hedging: a) operational hedging (balance sheet) to ensure operational flexibility; b) market hedging (external), which involves the use of derivatives as instruments to hedge profit volatility; c) contract hedging (contractual clauses, embedded derivatives. Based on the analysis of the reports of 250 banks, it was found that Bank of America, JPMorgan Chase & Co., Goldman Sachs, Morgan Stanley, and Citigroup are the market makers in the most developed US futures market. Horizontal analysis of the balance sheets of these banks showed that although the share of derivatives designated as hedging instruments is insignificant (less than 1%) relative to term contracts recognized as trading instruments, the hedging effect is significantly higher than the gains on the trading portfolio. It was found that in international practice, the dominant direction is the hedging of interest rate risk (the share of which varies between banks from 42.52% to 61.26%), in the structure of hedging instruments, interest rate swaps prevail. The share of currency derivatives varies from 18.67% to 41.45%. Interest rate risk is hedged by over-the-counter bilateral term contracts for active operations, currency risk hedging equally covers the risks of passive and active operations. The regression analysis revealed that private credit and trading assets have an inverse effect on regional hedging exposure, and debt instruments have a direct effect. The study provides a basis for assessing the potential of using innovative risk-hedging instruments by Ukrainian banks.

Financial and legal status of the european central bank in the institutional structure of the european banking system

The paper deals with the problem of determining the financial and legal status of the European Central Bank (hereinafter referred to as the ECB), analyzing scientific approaches to the essence of the concept of "financial and legal status of the central bank", as well as the constituent elements that determine this status. Particular attention is paid to the correlation between the financial and legal status of the ECB and the National Bank of Ukraine (hereinafter - the NBU), namely: in powers, independence, profit sharing, and functions. The European Central Bank is an organization with a special status. Only the ECB has the exclusive right to authorize the issuance of banknotes on the territory of the community. It should be especially emphasized that banknotes issued by the ECB and national central banks are the only banknotes that have the status of legal tender in the EU. Also, its importance is emphasized by the fact that each of the member states had to ensure, at the latest - before the date of creation of the ESCB, compliance with the Treaty on the European Community and the Statute of the ESCB and the ECB, including the Regulation on the national central bank. The European Central Bank is an organization with a special status. Only the ECB has the exclusive right to authorize the issuance of banknotes on the territory of the community. It should be especially emphasized that banknotes issued by the ECB and national central banks are the only banknotes that have the status of legal tender in the EU. The financial and legal status of central banks is based on the general legal status, therefore, first of all, the general provisions on the legal nature of central banks contained in the laws on these banks are analyzed. The financial and legal status of the ECB in the institutional structure of European banking is defined in the financial and legal functions and powers, namely: in the implementation of foreign exchange operations, management and maintenance of foreign exchange reserves and ensuring the smooth functioning of the payment system, support the general economic policy of the union, and also contribute to the implementation of measures to strengthen the stability of the financial system.

"Екологічний" вектор регулювання діяльності банків: модель ЄС

Ukraine is on the verge of joining the European Union, which requires, on the one hand, the transformation of the regulation of banking activity in accordance with the standards adopted by it, and on the other hand, the implementation of the concept of sustainable financing in all spheres of public life, including the banking system. Recently, a stable trend has emerged in the countries of the Euro zone, which consists in liaison of the mechanism of regulation of banks’ activity to the goals of sustainable financing, which makes it necessary to do changes to the existing standard of requirements for the capital of credit institutions (CI) and to regulate its adequacy. The mentioned metamorphosis has also spread to the banks of Ukraine, which are only taking the first steps in the direction of introducing the key principles of sustainable financing into their practical work. Along with the above, in the near future the domestic banking sector may face the problem of "greening" the mechanism of regulation of their activity according to European standards, directives, regulations and guidelines. Solving this extremely difficult problem will require the NBU to take decisive and, at the same time, well-balanced measures, which would not hinder the active development of investment and lending in a sustainable economy. The aim of the study is to reveal the key provisions of the regulation of banks in the EU, to determine the vectors of their change in accordance with the goals of sustainable financing, as well as to develop recommendations for the banking sector of Ukraine. In this research, methods of scientific knowledge were used, in particular: obser­vation, theoretical generalization, ab­stract­tion, comparison, analysis and synthesis, induction and deduction. The main provisions of the Directive on capital requirements and regula­tion of capital adequacy of banks in the European Union are outlined. The essence of harmonious finance and the stages of its transformation in EU countries are revealed. The ecological vector of the regulation of banks’ activities was considered, and the difficulties and prospects of its implementation in the banks of Ukraine were determined. A "chain" of step-by-step implementation of the NBU’s "environ­mental" regulatory initiatives in Ukrainian banks is proposed based on the best European practices and the possibilities of their imple­mentation in a country at war.

ОСОБЛИВОСТІ ІНФЛЯЦІЙНИХ ПРОЦЕСІВ В УКРАЇНІ: ПРОБЛЕМИ І ПРИЧИНИ

Research objective. The main purpose of this article is to examine the evolution and dynamics of inflationary processes in Ukraine during 1991–2023 on the basis of historical and systemic analysis, methods of dynamic analysis, structural analysis, and comparative analysis. Separate goals are to reveal and theoretically substantiates the main regularities of inflationary processes influence on the economic development and to analyze the features of anti-inflation regulation in the economy of Ukraine. Research methodology. In the paper, the authors examined inflationary processes with the aim of identifying their consequences for the economy of Ukraine. A review of publications has shown varying studies of the inflationary process. The paper describes the chronology of inflationary processes, the dynamics of the consumer price index, the socio-economic consequences and causes of inflation in Ukraine. Attention is focused on the need for state regulation of inflationary processes. The effectiveness of the anti-inflationary policy was determined. In line with the findings of the study, the prospects for the implementation of an effective monetary anti-inflationary policy aimed at effective regulation of inflationary processes are outlined. Conclusions. The authors conclude that the study of inflationary processes is important because inflation affects the exchange rate, economic growth and welfare. Economic agents always adjust financial risks, taking into account that inflation has historically been one of the most acute problems of Ukraine, which has uneven constant development. This study is aimed at determining the essence and causes of inflation in Ukraine during the period of restoration of its independence, as well as the possibility of its regulation by monetary methods. Inflation in Ukraine has specific features related to pricing, purchasing power, money circulation, anti-inflationary and anti-cyclical policies. Practical implications. The results of this study are of interest to the Ministry of Economy of Ukraine, the National Bank of Ukraine, as well as the Committee on Ukraine's Integration into the European Union, whereas the processes of European integration contribute to reducing inflation in the future. Originality/value. This study highlights the discussion on inflationary process in the transition economy of Ukraine. The authors emphasize that inflation in Ukraine has a permanent character and requires constant regulation to achieve significant progress in its reducing. The authors discoveredthat authorities should focus on the medium-term horizon of inflation control to ensure a reduction in inflation, as well as a level of inflation appropriate for price stability.

THE KEY RATE OF THE CENTRAL BANK AS A MONETARY POLICY TOOL

The article examines the theoretical and methodological foundations of the interest policy of the National Bank of Ukraine. It is noted that the accounting rate is one of the monetary instruments, with the help of which the central bank establishes for banks and other subjects of the money market a benchmark for the value of the funds raised and placed. It was determined that in the process of implementing the interest policy, the National Regulator also sets the interest rate for permanent access instruments from: absorption of excess liquidity for the overnight term (for overnight deposit certificates) at the level of the discount rate; provision of additional liquidity for the overnight term (for overnight loans) linked to the discount rate. The study also states that the interest rate channel is the main channel of the transmission mechanism, because the mechanism of its action is that a change in monetary policy through a change in the discount rate directly affects short-term rates on the financial market, and through the yield curve - on long-term rates. The importance of returning to the inflation targeting regime, choosing its eclectic type, has been proven under favorable conditions. This will make it possible to apply a double mandate: ensuring price stability and, for example, maintaining the employment of the population. After all, full-fledged inflation targeting requires a sufficient level of development of the financial market, balanced state finances, an appropriate structure of the economy (free pricing, an insignificant level of dollarization of the economy, etc.). Also, under appropriate conditions, it is necessary to restore the symmetric corridor of interest rates and return to the operational design of the interest policy, which was in effect before the introduction of martial law.

Global trends in the financial system and their impact on the banking sector of Ukraine: analysis and recommendations

The paper covers the modern global trends in the financial sphere and their impact on the banking sector of Ukraine. The research was carried out on the basis of a comprehensive analysis of global financial changes, the dynamics of technological innovations and unique challenges facing the banking system of Ukraine. The study reveals key trends in the development of the banking sector, focusing on global challenges and prospects. The modern banking system of Ukraine is in an era of significant technological changes adapted to meet the needs of customers and optimize banking processes. Ukrainian banks must respond to global trends in the financial sphere to ensure competitiveness and meet the growing demands of customers. This requires innovation, digitization and flexibility to respond to rapid changes in technology and consumer behavior. Competition for customers and leadership in innovation are among the key points. Focusing on important aspects of transformation, the scientific work contains not only a thorough analysis of modern trends, but also specific recommendations for Ukrainian banks regarding their effective adaptation to global financial trends. In order to create a strategic direction for Ukrainian banks and ensure their successful future, the authors proposed a comprehensive set of recommended measures covering key aspects of financial activity. If these recommendations are successfully implemented, Ukrainian banks can become the foundation of a stable and innovative financial system that meets the challenges of the global market and contributes to the sustainable development of the country's economy. The paper is distinguished by highlighting not only the problems, but also the opportunities that global financial trends generate. This approach contributes to the uniqueness and value of the work from among the scientific developments in this area for specialists in the financial industry, scientists and everyone who is interested in the future development of the Ukrainian banking system.

DIGITALIZATION OF RISK-ORIENTED MANAGEMENT OF FINANCIAL AND ECONOMIC SECURITY OF THE BANK

The scientific results of the study are to determine the current trends of digitalization of risk-oriented management of banking activities to justify the directions of increasing the level of financial and economic security of Ukrainian banks in the context of the Russian-Ukrainian war and considering the needs of economic recovery. The expediency of using indicators of financial stability, which are published by the National Bank of Ukraine under martial law, has been proven, namely: the capital of the first level to the assets weighted by risk; the ratio of the capital of the first level to assets; non-performing loans excluding provisions for capital; non-performing loans to aggregate gross loans; rate of return on assets; net open position in foreign currency to capital. It is determined that modern banks introduce innovative digital solutions aimed at risk-oriented management of financial and economic security in a continuous real-time mode. Some procedures are performed automatically, and it is possible to use artificial intelligence programs, but these innovations must be managed carefully because we are talking about the financial security of millions of bank customers and the financial and economic security of banks, as well as the financial stability of the banking system of Ukraine. It has been substantiated that prospects for further research should be developed in the areas of economic recovery in Ukraine, by strengthening the banking system and developing digitalization of risk-based management of financial and economic security of banks using best practices and international experience. For a more objective assessment of the level of financial and economic security of Ukrainian banks, it is advisable to apply economic standards, regarding banking risks, indicators of financial stability, and the financial stress index, which together reflect the bank’s propensity for force majeure in the financial system, the ability to resist and adapt to adverse changes, and various economic challenges.