Ukraine eliminates a scheme of transfering currency abroad through US bonds
24 December 2024 09:28
The National Securities and Stock Market Commission of Ukraine (NSSMC) has decided to ban the withdrawal of foreign issuers’ securities from the depository accounting system. The restriction will be in effect from January 1, 2025, for the period of martial law, "Komersant Ukrainian" reports.
This decision was made ostensibly to fulfill the requirements of the IMF Memorandum and agreed with the National Bank of Ukraine to “harmonize national currency legislation.”
In practice, this is the same scheme that described earlier – the withdrawal of currency abroad by purchasing US government bonds. Under this scheme, businesses could legally buy US bonds for hryvnia, then transfer them to accounts in foreign depositories, and after repayment receive foreign currency outside Ukraine.
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This scheme was not cheap, but it was legal and, importantly, encouraged by the US government. Therefore, it was believed that the Ukrainian authorities were afraid to ban it in order not to spoil relations with the Americans.
However, according to yesterday’s decision of the NSSMC, the write-off of foreign issuers’ securities will be allowed only in two cases: in the course of corporate transactions of the issuer and to bring the number of securities on the accounts of the Central Depository in line with the data of international depository institutions. The new rules should make it impossible to withdraw currency abroad through US bonds.
“For eight months, the Commission has held numerous meetings as part of the negotiation process with the IMF and the NBU to find a satisfactory solution for the capital markets. We have made a lot of efforts and today’s decision was a compromise, as the issue of a complete ban on the admission and trading of foreign issuers’ securities in Ukraine was on the agenda,”
– commented Irakliy Baramiya, a member of the NSSMC.
Restrictions, and in fact a ban, on the withdrawal of currency abroad were introduced by the Ukrainian authorities at the beginning of the full-scale war. It is believed that this was done to ensure the stability of the national currency and the economy.
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