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Lawyer: Greater NBU powers to influence currency market justifiable due to risks to economy

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Aug. 1, 2012, 12:47 p.m. | Business — by Interfax-Ukraine

A legal initiative aimed at granting a set of instruments allowing the National Bank of Ukraine (NBU) to quickly react to tensions on the country's currency market without involving currency reserves is justifiable and rather urgent, according to a legal expert.
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A legal initiative aimed at granting a set of instruments allowing the National Bank of Ukraine (NBU) to quickly react to tensions on the country's currency market without involving currency reserves is justifiable and rather urgent, according to a legal expert.

Advisor of the Arzinger law firm Oleksandr Plotnikov gave his opinion to Interfax-Ukraine while commenting on draft law No. 11033 on amendments to some Ukrainian laws on the expansion of instruments to influence the monetary and credit market registered in the parliament on July 25, 2012.

"The main constitutional function of the NBU is the provision of stability of Ukraine's monetary unit, and the granting of instruments to quickly influence the currency market to the NBU has grounds, especially taking into account the high risk of another wave of financial crisis in Ukraine, as predicted by the IMF," the lawyer said.

The draft law foresees the granting of a right to introduce a requirement for the obligatory sale of income in foreign currency by exporters for a period of up to six months and changes the terms of payments in foreign currency during export and import transactions.

"The proposed changes are aimed at giving a set of instruments to the NBU, which will allow it to quickly react to tension on the currency markets, not involving currency reserves," Plotnikov said.

The lawyer said that under Article 387 of the economic Code of Ukraine, the regime of obligatory distribution of income in foreign currency could be introduced only by a law officially published not later than two months before the introduction of the regime. The procedure does not allow for a quick reaction to situations, and considerably restricts the NBU in implementing its constitutional function.

"We share the opinion that in the conditions of the present political instability and coming parliamentary elections, the NBU should not be hostage to the political will of lawmakers during the regulation of the situation on the Ukrainian currency market," the expert said.

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