The Law of Ukraine
On the National Bank of Ukraine
Date of Entry into Force:
June 22, 1999
The National Bank of Ukraine (hereinafter referred to as the NBU) shall be the central bank of Ukraine, a special government body, whose legal status, tasks, functions, authorities, and organization principles shall be established by the Constitution of Ukraine and other laws of Ukraine.
The NBU statutory capital shall be state property and amounts to UAH 10 million. The size of the statutory capital may be increased upon a decision of the Council of the National Bank. Sources for forming statutory capital of the National Bank shall be revenues of its budget and, if necessary, the State Budget of Ukraine.
Management bodies and the headquarters of the National Bank shall be located in the City of Kyiv.
The National Bank shall be accountable to the President of Ukraine and the Verkhovna Rada of Ukraine within the scope of their constitutional powers. The National Bank and the Cabinet of Ministers of Ukraine shall hold mutual consultations on monetary and credit policy, development and implementation of the general state program for economic and social development.
The National Bank shall be an economically independent body, which shall pay the expenses for the account of own revenues within the limits of the adopted budget and in cases envisaged by this Law at the expense of the State Budget of Ukraine.
The National Bank shall be a legal entity with separate property that is the object of state ownership and perform its full economic management. Profits shall not be the goal of the National Bank. The National Bank shall be prohibited from giving direct loans both in the national and foreign currencies to finance expenditures of the State Budget of Ukraine.
The National Bank shall not be responsible under obligations of government bodies and other banks, while government bodies and other banks shall not be responsible for commitments of the National Bank, except for cases, when they voluntarily undertake such commitments.
The National Bank can open its institutions, offices and representations in Ukraine, as well as representations beyond its borders. The structure of the National Bank shall be built on the principle of centralization with vertical subordination. Offices of the NBU shall not have the status of legal entities and cannot issue normative acts. They shall function on behalf of the National Bank within the scope of granted powers. Tasks and functions of offices of the National Bank shall be determined by a Provision that is adopted by the Board of the National Bank.
The National Bank, its institutions, offices and representations shall have a seal with the National Emblem of Ukraine and its name.
Funds and reserves of the National Bank to cover financial risks related to the performance of its functions shall be formed according to a Provision that is adopted by the Council of the National Bank of Ukraine.
According to the Constitution of Ukraine, the key function of the National Bank shall be ensuring stability of Ukraine’s monetary unit.
Management bodies of the National Bank shall be the Council of the National Bank of Ukraine and the Board of the National Bank of Ukraine. The Law sets forth the procedure for the establishment, operation and authorities of the NBU management bodies.
The National Bank shall inform the Verkhovna Rada of Ukraine on an annual basis about directions of monetary, credit and currency exchange policy developed by the National Bank for the next year and for a longer period of time.
The National Bank shall establish mandatory reserve requirements for banks. However:
1) mandatory reserve requirements shall be the same for all banks as a percentage to the general amount of funds attracted by the bank in the national and foreign currencies;
2) different mandatory reserve requirements can be established for different types of liabilities;
3) a decision on raising mandatory reserve requirements shall come into force at least ten days after its publication.
The National Bank shall establish the procedure for determining a discount rate and other interest rates for its transactions. The National Bank shall ensure management for the state gold and foreign currency reserves by carrying out foreign currency interventions through purchase and sale of currency values at foreign currency markets in order to affect the national currency exchange rate against foreign currencies and the general demand and supply of money in Ukraine.
The Cabinet of Ministers of Ukraine shall keep funds of the State Budget of Ukraine and off-Budget funds in the National Bank at the accounts of the State Treasury of Ukraine. Conditions and procedures for servicing funds of the State Budget of Ukraine shall be determined by an agreement between the National Bank and the State Treasury of Ukraine.
Ukraine’s monetary unit shall be the hryvnia, which amounts to 100 kopiyka. Emission and circulation of other monetary units on the territory of Ukraine and use of monetary substitutes as a payment tool shall be prohibited. The National Bank shall establish the official hryvnia exchange rate against foreign currencies and publish it. The National Bank shall use gold and foreign currency reserves to regulate the hryvnia exchange rate against foreign currencies.
The exclusive right to introduce the hryvnia and small coins into circulation, organize their circulation and withdraw them shall belong to the National Bank. Banknotes and coins shall be indisputable liabilities of the National Bank and shall be secured by its all assets. The NBU and Ukrainian banks shall withdraw counterfeit, faked banknotes (and coins) or those which do not have the necessary signs of pecuniary value.
The NBU shall act as an authorized government institution to apply Ukraine’s legislation on foreign currency regulation and foreign currency oversight. The scope of the NBU powers shall include:
1) issuing normative and legal acts on performing foreign currency transactions;
2) issuing and withdrawing licenses, overseeing – including by way of fulfilling scheduled and random inspections – activities of banks, legal entities and natural persons (residents and non-residents), who received a license of the National Bank to perform foreign currency transactions, as to their adherence to the legislation on foreign currency;
3) establishing limits for open foreign currency position for banks and other institutions that buy and sell foreign currency;
4) applying responsibility measures to banks, legal entities and natural persons (residents and non-residents) for violating rules of foreign currency regulation and foreign currency oversight.
To ensure internal and external stability of Ukraine’s monetary unit, the National Bank shall have gold and foreign currency reserves that consist of the following assets:
- monetary gold;
- special lending rights;
- reserve position in the International Monetary Fund;
- foreign currency in the form of banknotes and coins or funds on accounts abroad;
- securities (except for shares) that are taken up in foreign currency;
- any other internationally recognized reserve assets on the condition that their reliability and liquidity is secured.
The National Bank shall issue normative and legal acts on issues included into its powers. These shall be mandatory for government bodies and local self-government bodies, banks, enterprises, institutions and organizations regardless of their form of ownership, as well as for natural persons. Normative and legal acts of the National Bank shall be issued in the form of resolutions of the NBU Board, as well as instructions, provisions, rules that are adopted by resolutions of the NBU Board. Normative and legal acts of the National Bank shall be subject to mandatory state registration with the Ministry of Justice of Ukraine and shall come into force according to the legislation of Ukraine.
Employees of the National Bank shall be civil servants and shall be subjected to norms of the Law of Ukraine “On the Civil Service”. Ranks of civil servants of the National Bank that conform to post of the first category shall be conferred by the President of Ukraine. Other ranks shall be conferred by the Governor of the National Bank.
The Governor of the National Bank, their deputies, members of the Board of the National Bank and other employees of the National Bank according to the list of posts approved by the Board of the National Bank cannot be People’s Deputies of Ukraine, members of the Government of Ukraine, perform entrepreneurial activity, perform activities by combining two or more jobs, except for teaching, research and other creative activity. Employees of the National Bank shall be prohibited from entering management bodies and be shareholders of banks.
The National Bank shall be prohibited from:
1) being a shareholder of or a participant in banks and other enterprises and institutions;
2) performing transactions with real estate, except for those related to ensuring activity of the National Bank and its institutions;
3) performing trade, manufacturing, insurance, and other activity that does not conform to the functions of the National Bank.