You're reading: Ukraine’s National Bank restricts currency issuance by payment cards

The National Bank of Ukraine has banned the issuing of foreign currency using payment cards starting Sept. 2, introduced the mandatory conversion of foreign currency transfers to hryvnias and slowed the procedure for buying foreign currency on the interbank forex market.

The bank’s corresponding resolution of Aug. 29, 2014 is available to Interfax-Ukraine.

“The issuance of cash inside Ukraine by electronic payment cards, issued by both residents and non-residents, will be conducted in hryvnias,” the resolution says.

The curbs reflect the current political tensions and uncertainty, and elements of risk, given the current economic problems connected with the ongoing law enforcement operation in Ukraine, the resolution says.

The NBU is convinced that the application of the new mechanisms will help prevent the use of the Ukrainian financial system for money-laundering and for financing terrorism, and will help settle the situation on the forex market.

“Sums in foreign currency transferred from abroad to individual residents and nonresidents to pay in cash without opening an account are paid only in hryvnias,” reads the document.

The resolution foresees the introduction of the T+2 regime for transactions of purchasing foreign currency on the interbank currency market under clients’s orders of banks.

“The banks are obliged to preliminary send funds in hryvnias to a separate analytical account to buy foreign currency under order of clients… The funds could be sent to buy foreign currency from the account no earlier than the third operating day from the day of sending hryvnias to the account,” reads the document.

According to the document, banks will send the volume in hryvnias sufficient to buy the planned volume of foreign currency at the exchange rate on the day of sending the funds, but no lower than the official exchange rate.

If the exchange rate changes on the day of the transaction during the purchase of foreign currency banks are permitted to additionally send funds in hryvnias to the account in the sum lacking for the fulfillment of the order of clients.

“Banks form a register on the purchase of foreign currency which is submitted to the NBU on the day of receiving applications of clients on the purchase of foreign currency jointly with documents used as a ground for the purchase of foreign currency,” reads the document.

The resolution also bans the early payment of credits, loans (including the financial aid) in foreign currency under agreements with nonresidents without supply of foreign currency on the interbank market.

As reported, NBU in resolution No. 540 prolonged resolution No. 328 of May 30, 2014 from Sept. 2, 2014 for three months. The resolution restricts issue of deposits pegged to foreign currency and limits the purchase of cash foreign currency to Hr 15,000 a day.

The NBU also foresees that individuals will be able to transfer foreign currency outside Ukraine without confirmation documents for the sum of up to Hr 15,000 a day, and from the current account – no more than Hr 150,00 a month (on the basis of documents confirming the origin of funds).

According to the document, banks suspend issues of savings certificates and the savings certificates issued earlier are repaid via sending funds to the account of the holders of certificates or their bearers.

Banks will be able to early return deposits in foreign currency in the national currency under the bank’s purchase exchange rate on the day of the transaction.

For the period when resolution No. 540 is in effect, the operating day of banks is prolonged until 6 p.m., and transactions settled after the operating day are reflected by the bank next day.

NBU resolution No. 540 took effect on Sept. 2 and it is in effect until Dec. 2, 2014.