B) Currency regulation

At the beginning of the NBU's activity, the currency market concentrated on lots of problems related to the general standing of the economy of the country. The slow pace of restructuring, faulty legal framework for advocacy of businesspeople's rights, augmentation of processes causing inflation in the economy resulted in an increased demand for currency values.

The fixation of the exchange rate in Ukraine that lasted from August 1993 to October 1994 exacerbated the negative condition peculiar to the crisis in the country's economy such as reduced exportation of products paid for in foreign currency and the volumes of outputs of import-dependent enterprises, decreased receipts of hard currency on the internal currency market of Ukraine, and increased outflow of capital abroad.

Pursuant to the program of economic reforms, steps were needed to provide gradual liberalization and decentralization of the currency market.

Since October 1994, the official exchange rate of Ukrainian karbovanets, which hitherto had been imposed administratively, began to be defined by way of bidding on the Ukrainian Inter-bank Currency Exchange (UICE). The number and volumes of sales on the UICE increased gradually.

Since June 1995, the currency exchange has initiated daily sales of US dollars and Russian rubles, and since December of the same year - German marks. Also, traded are Byelorussian rubles, French francs, Italian liras, English pounds sterling.

For the expansion of the currency exchange network, affiliates of the UICE were opened in Kharkiv, Dnipropetrovsk, Donetsk, and Lviv. The Crimean inter-bank currency exchange also has been put into operation.

Since spring 1995, authorized banks have been given the right to carry out in the inter-bank currency market of Ukraine transactions of buying and selling US dollars, German marks, Russian and Byelorussian rubles, which are subject to free sale. And since May 1995 it has permitted to implement mandatory sales of currency receipts and spare currency funds of Ukrainian residents both through the UICE and directly via authorized banks on the inter-bank currency market.

With the goal to increase the demand for the national currency and stabilize the exchange rate, the National Bank of Ukraine undertook the following steps to strengthen the priority of the national monetary unit as a single payment means in Ukraine:

• on initiative of the NBU, the Verkhovna Rada passed the Law of Ukraine «On Amending Article 7 of the Decree of the Cabinet of Ministers of Ukraine "On the System of Currency Regulation and Currency Control"», pursuant to which remuneration of labor of residents of Ukraine on its territory must be implemented exclusively in the national monetary unit;
• in pursuance with the Decree of the President Ukraine on the termination of retail trade and rendering of services on the territory of Ukraine for cash foreign currency, the NBU developed special Procedure, in accordance with which the circulation of cash foreign currency as a means of payment has been discontinued in Ukraine since August 1995.

An important step on the route of settling the national monetary unit and its acknowledgment in the world is Ukraine's agreeing, in May of 1997, to Article VIII of the Statutes of the International Monetary Fund. This also means international acknowledgment of the hryvnia as a convertible monetary unit in current transactions.

Date: 2015-01-11; view: 961