Ukraine—Further Regulatory Approximation with EU Legislation and International Standards in Financial Markets

Since Russia’s invasion, Ukraine has faced immense challenges to its economic stability, institutional resilience, and social fabric. The EU has moved to address Ukraine’s immediate needs but is also investing in its long-term recovery and reconstruction, focusing on strengthening sectors critical to economic and social resilience.

The war has exposed significant vulnerabilities in Ukraine’s financial environment, including outdated legal frameworks, limited institutional capacities, and misalignment with EU standards, which hinder the country’s ability to mobilize finance, attract investment, and support rebuilding. Through this project, DAI will support the Ukrainian government in aligning its legal and regulatory framework with European and international norms pertaining to investment, pension funds, and capital markets, with the goal of promoting a more stable, secure, and efficient financial services sector.

By developing a robust legal and regulatory framework, enhancing the institutional capacities of the National Bank of Ukraine and the National Securities and Stock Market Commission, and harmonizing financial regulations with EU practices, this project aims to create a resilient financial system capable of meeting Ukraine’s recovery, rebuilding, and modernization needs. Reforms in the financial markets sector will bolster investor confidence and facilitate broader access to international capital. Reforms in areas such as consumer protections, financial literacy, and sustainable finance will improve financial inclusion and alignment with international environmental and governance standards.

The project aligns directly with Ukraine’s priorities for financial reform and EU integration, as articulated in documents such as the Strategy for Ukrainian Financial Development and the EU Ukraine Plan. Among the financial reforms envisaged by the Ukraine Plan:

Restoring the sustainability assessment and asset quality review of the largest banks.

• Reducing state ownership in the banking sector.
• Improving the resolution of banks’ non-performing loans.
• Building capacity in the financial supervisory authority.

This technical assistance is in part a continuation of the Strengthening the Regulation and Supervision of the Non-bank Financial Market project, also implemented by DAI and successfully concluded in 2023.