NBU prevents capital flight to Russia

The Council of the National Bank of Ukraine (NBU) approved measures for preventing capital flight to Russia as an aggressor-country, according to the NBU web site on Feb 21. In particular, the regulator will be in position to reject the provision of individual licensing for foreign currency operations if it detects that the applicant in some way is connected or works for the benefit of Russia.

Alexander Paraschiy: This decision most likely is a response by the NBU to widespread discontent about Russian banks operating in Ukraine.  In fact, according to Ukrainian legislation, the banks which are ‘Russian’ are Ukrainian banks with foreign capital.  The head of the NBU Valeria Gontareva reported that banks with Russian capital are more disciplined than other banks and perfectly comply with regulation of Ukraine. Still, in light of the regular closures of local banks and tension related to the trade blockade, politicians and activists are heavily criticizing the NBU for the friendly treatment of Russian banks in Ukraine. In essence, the decision does not necessarily mean that any substantial impediment to the operation of entities related to Russia will be created.  But politically, the effort to prevent capital flight to Russia sounds appealing.