andriy pyshnyy : national bank of ukraine press briefing - monetary policy decisions speech by mr andriy pyshnyy, governor of the national bank of ukraine, at a press briefing on monetary policy decisions, kyiv, 14 december 2023. * * * dear colleagues, today the board of the national bank of ukraine has decided to cut the key policy rate to 15 % effective 15 december 2023. this decision comes along with a decline in inflation and an improvement in inflation expectations, which will contribute to sustained attractiveness of hryvnia savings instruments. in november, inflation declined slightly faster than expected, to 5. 1 % the slowdown in inflation was driven by an increase in supply of food products from the new harvest as well as by an improvement in expectations brightened by the stronger hryvnia exchange rate. the stronger hryvnia also made core inflation decline faster than expected by the nbu. the nbu estimates inflation readings in december to remain close to the current levels. at the same time, the risks that inflation might accelerate are persisting due to logistical problems at western borders and effects from large harvests waning faster. the adaptation to managed flexibility of the exchange rate has been successful the fx market remained sustainable after the introduction of the new exchange rate regime. demand for foreign currency spiked only in the first days of the managed flexibility regime, and the balance of supply and demand improved after that. this also led to a decrease in the nbu's net fx sales. in november, the balance of the nbu's interventions was usd 2. 5 billion, which was less than in previous months. as declared, every day the nbu covered the structural deficit of foreign currency, letting the hryvnia exchange rate sway in either direction influenced by changes in supply and demand. the new exchange rate regime resulted in a notable pickup on the interbank market, in particular by boosting volumes of transactions between the banks without the nbu's participation. an increase in the depth of the fx market is important for reducing its susceptibility to situational factors and for improving exchange rate sustainability. moreover, the link strengthened between the cash and cashless segments of the fx market as restrictions were lifted for the banks to sell cash foreign currency to households. 1 / 3 bis - central bankers'speeches the nbu will remain active on the fx market the structural deficit of foreign currency will persist due to the consequences of the war.

of governance. corporate governance is the corner stone for any enterprise, but for banks, it assumes a distinctly different undertone and importance. it is well - known that banks are special in terms of services they render and the segments they touch while rendering these functions. by providing financial intermediation and maturity transformation, payment and settlement services, reducing information asymmetries, and engaging in deposit mobilisation, banks act as catalysts in growth of the economy. most importantly, they enjoy the privilege of mobilizing uncollateralized public deposits and operating with high levels of leverage. the negative externalities of banks and nbfcs are also much higher than those for any nonfinancial entity due to their inter - connectedness. that ’ s why, globally, banks are regulated and supervised very closely. 5. it is also well - acknowledged that shareholders are driven by maximisation of the returns on their capital. but in banks, this objective is realised largely through the resources raised from depositors. hence, as repositories of public resources, banks need to design appropriate 1 / 4 bis central bankers'speeches governance standards and implement internal controls to be worthy of the public trust. being highly leveraged entities and with their inter - connectedness, there must be separation between ownership and management so that they operate on professional lines. 6. governance reforms have been an area of continued focus for the reserve bank. the various regulatory measures including the mandatory listing of private sector banks, composition of the board and its committees, guidance on “ fit and proper ” criteria and on remuneration, separation of chairperson from managing director / chief executive officer have all been driven to improve the corporate governance and internal controls in banks. supervisory initiatives 7. i shall now highlight the various prudential supervisory initiatives taken by reserve bank in recent years. the broad objectives of these can be detailed as follows : ( i ) bringing about a unified and more holistic approach to supervision and improving skill and capacity of supervisory staff. ( ii ) improving the governance practices and internal defenses in supervised entities, including an assessment of business model adopted. ( iii ) identifying early warning signals, increasing the focus on root cause of vulnerabilities and initiating corrective actions, as also refining supervisory processes and communications. let me elaborate a little on these areas. ( a ) unification of supervisory approach, building specialisation, capacity and skills in supervision 8. in order to ensure a unified and systemic approach, a unified department