“Financial markets today: less shock, more predictability” – Oleksandr Matiushenko

The development of financial instruments on the domestic market will help reduce the impact of external risks on the economy. Oleksandr Matiushenko, a member of the Board of Pivdenny Bank and Director of the Bank’s Corporate Business Department, discussed this issue during his speech at the annual Forum of Financial Directors of Ukraine.

According to the director, today there are two problems in the financial market. The first is related to the growing share of government T-bills.

“The fact is that this growth is less effective in stimulating the economic growth than lending. The share of T-bills and the NBU’s certificates of deposit is growing within the structure of bank assets. The purchase of T-bills is indirectly financed by the NBU through refinancing, and the excess liquidity is used mostly to finance the Ministry of Finance and government programmes,” said Matiushenko.

The solution to this problem for banks may be intensified lending to private businesses as the most efficient actors in the chain of additional product creation and GDP growth:

“As far as the government is concerned, they should ensure the protection of the rights of creditors and investors, while the NBU should offer macroprudential instruments to restrict banks’ participation in financing the government. In addition, it is necessary to stimulate the growth of the corporate securities market.”

The second problem is the lack of a secondary market for certificates of deposit and interbank interest rate swaps.

“In 2020, during the lockdown, the government launched interest rate swaps as a new instrument to reduce the interest rate risk facing Ukrainian banks. It was developed as a hedging instrument and a means to boost long-term lending. This product enjoyed high demand of up to UAH 5 billion. The interest rate was low. In 2021, the total amount of the action bids was reduced to UAH 500 million, and the rate was increased to 8% (+1.5%). The programme was phased out from 1 October,” said Matiushenko.

According to the board member, solving this problem requires developing a secondary interest rate swaps market and attracting corporations, while the NBU will act as a market maker in the interest rate swap market.

Just a reminder: The Forum of CFOs is a mini-encyclopaedia of modern financial management. Pivdenny Joint-Stock Bank has traditionally been a partner of the forum, which has gathered domestic financial elite for the 20^th edition of the event this year.