I. Key terms. Banking supervision

Banking supervision

The National Bank of Ukraine determines the foreign exchange policy.

Foreign exchange authority

Issuing centre

Functions of the National Bank of Ukraine

Text A. Central bank

THE NATIONAL BANK OF UKRAINE

UNIT VIII

The National Bank, as the central bank, carries out the state's monetary policy using appropriate instruments. The National Bank of Ukraine keeps the State Register of Banks, Foreign Currency Exchanges, and Other Financial Institutions,

The National Bank maintains relations with other coun­tries' central banks, international banks, and other financial institutions on behalf of Ukraine.

The National Bank of Ukraine serves as:

- the central bank which conducts a uniform state poli­cy in the area of monetary circulation and credit and ensures the stability of the national currency;

- issuing centre;

- foreign exchange authority;

- supervisory body;

- bank of the banks;

- bank of the State;

- organizer of interbank settlements.

The National Bank of Ukraine has the exclusive right to put currency into circulation, and to introduce national banknotes and coins.

Cash supply to the economy (Hryvnia) is carried out through a network of the National Bank's regional departments commercial banks. The National Bank supervises as requested by the State Treasury of Ukraine and builds up gold and for­eign exchange reserves for its own account.

In the sphere of foreign exchange regulation and con­trol, the National Bank:

- carries out foreign exchange policy based on the general principles of Ukraine's economic policy:

- monitors observance of the limits of the external pub­lic debt;

- accumulates, stores and uses foreign currency reserves to carry out the national foreign exchange policy;

- grants foreign exchange licenses;

- determines the methods of ascertaining foreign exchange rates, translated into the Ukrainian currency

- monitors compliance with the rules of foreign exchange transactions in Ukraine.

To protect the clients interests and to secure commercial banks' financial reliability, the National Bank impos­es the following requirements on commercial banks:

- required minimum statutory fund;

- equity ratio;

- balance sheet liquidity ratios;

- minimum reserve requirements;

- maximum risk for one borrower.

Monetory circulation	- грошовий обіг
Supervisory body	- наглядова установа
Interbank settlements	- міжбанківські розрахунки
State Treasury of Ukraine	- Державне Казначейство України
External public debt	- зовнішній державний борг
Statutory fund	- статутний фонд
Equity ratio	- відношення акціонерного капіталу до загальної суми активів

II. Answer the following questions in your own words:

1 What do we call the Central Bank of Ukraine?

2 What are the functions of the NBU?

3 Does the NBU have the exclusive right to do what?

4 What financial institution determines the foreign exchange policy?

5 What are the functions of the NBU as of a foreign exchange authority?

6 Why do central banks impose requirements on commercial banks?

7 What are those requirements?

8 Explain the function of the NBU as the bank of the banks?

9 How do you understand its function as of the Bank of the State?

10 What do you know of its function as of the organizer of interbank settlements?

11 By what is the payment system supported?

III. Fill in the blanks in this passage, using words from the list given below:

lower inflation; interbank settlements; exchange market; regulatory framework; creating sound banking and currency system; the national currency; currency system.

From the first years of Ukraine’s independence, efforts of the National Bank have been aimed at _____, overcoming hyperinflation, strengthening _____, developing and liberalizing the foreign _____, introducing _____, creating the legislative and _____. The following can be considered as major attainments.

In terms of national currency stability by:

- to purposeful monetary policy geared to _____ and stabilize the national currency;

- build-up of official foreign exchange reserves.

In terms of the currency reform by:

- introduction of the Hryvnia;

- change of the scale of prices;

- creation of the country’s _____.

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