The International Monetary Fund (IMF), in its updated Extended Fund Facility Arrangement (EFF), noted wide-ranging activities initiated by the Ukrainian authorities, in particular the National Bank, to deepen financial markets infrastructure and oversight.

"These reforms will help ensure that the financial system is prepared to support economic recovery," the IMF said, introducing a table of 13 steps "NBU Activities to Strengthen and Deepen Financial and Capital Markets."

It is planned to close gaps with international valuation standards and propose an implementation roadmap to strengthen the valuation infrastructure and profession by end-March 2024, as well as to propose how a publicly accessible database of real estate transaction prices as well as residential and commercial property price indexes will be implemented by March-2024.

It is planned to propose priority actions for enhancing the capital market infrastructure to facilitate direct access by foreign investors to marketable debt instruments by end-April 2024 and to prepare a comprehensive strategy to support resumption of lending, with due regard to financial stability and fiscal risks by end-May 2024.

The next step is to prepare a draft law to establish a fully functional war insurance system by end-June 2024 and amendments to the Law on Banks and Banking by to include consideration of supervisory observations in the recognition of related parties end-June 2024.

It is also planned to hedge foreign exchange and interest rate risks and improve monetary transmission, prepare a concept note by that will set out the steps, conditions and timing needed to introduce and develop derivative financial instruments (including forwards) market by end-July 2024.

It is planned to prepare a concept note on regulatory requirements for person to person (p2p) and other such electronic payments with the aim of identifying and restricting unusual behavior by end-July 2024.

The next step is to prepare a concept note for a supervisory risk assessment methodology for payment service providers by end-August 2024 and implement the methodology by end-December 2024.

By end-September 2024, it is planned to propose ways to strengthen the requirements for audit companies and audit reports, and prepare an implementation road map.

Finally, by end November 2024, it is planned to develop strategies for the Ukrainian Financial Housing Company and Export Credit Agency, and implement a supervisory risk assessment methodology to inform supervisory engagement priorities by end December 2024, and this last point is the structural benchmark of the EFF.

According to the updated memorandum with the IMF, by end-December 2024, the NBU and the National Securities and Stock Market Commission, will prepare an update of the virtual assets legislation with input from IMF technical assistance and in consultation with IMF staff, to align with international best practice while considering economic development goals and mitigating price and financial stability risks.

In the updated memorandum, Ukraine also recognizes the growing importance of banks’ hybrid business models, specifically Banking-as-a-Service, a model in which banks integrate their digital banking services directly into the products of other non-bank businesses. The NBU in consultation with the IMF will propose a supervisory framework that will incorporate the specific risks of such business models based on international best practices by end-July 2024.

In addition, the NBU will increase capital requirements for payment market participants aligned with the EU payment services directive (PSD2, 2015/2366) and international good practice by end-June 2024, and prepare a supervisory risk assessment methodology by end-September 2024 that distinguishes between the types of nonbank financial institutions (NBFIs) with the aim to transition to a risk-based supervision approach for NBFIs.

According to the memorandum, the National Securities and Stock Market Commission will prepare draft regulation for financial intermediaries by end-December 2024, which will bring their capital requirements in line with the EU acquis.