session 2: the role of the financial sector in attracting fdi inna golodniuk case ukraine
DESCRIPTION
Rudimentary development of the domestic capital markets Hinders implementation of core policies and reforms Monetary policy Pension reform Monetary policy – lack of instrument for OMO, inflation targeting challenged Pension reform – restriction on investment possibilities for PPFs and insurersTRANSCRIPT
SESSION 2: The role of the financial sector in attracting FDI
Inna GolodniukCASE Ukraine
CASE Ukrainewww.case-ukraine.kiev.ua
Ukraine Poland CzechRepublic
Hungary
0,0%
20,0%
40,0%
60,0%
80,0%
100,0%
Banking assets, % of GDP
2000 2004Ukraine
PolandCzech
Republic Hungary
0,0%
10,0%
20,0%
30,0%
Stock market turnover, % of GDP
2000 2004
www.case-ukraine.kiev.ua
Rudimentary development of the domestic capital markets Hinders implementation of core policies
and reforms Monetary policy Pension reform
Monetary policy – lack of instrument for OMO, inflation targeting challenged
Pension reform – restriction on investment possibilities for PPFs and insurers
www.case-ukraine.kiev.ua
Capital Market Development
Liquidity Competitiveness
Need for proactive and consistent government as market participant as the Regulator
www.case-ukraine.kiev.ua
Market Liquidity Supplying new instruments to the
organized market Privatization through IPOs for most
attractive enterprises Channeling mortgaged backed securities
to the market Free float of stocks of state-owned
enterprises (with state ownership) Government bonds
www.case-ukraine.kiev.ua
Liquidity
Abolish limitations regarding exclusive listing at “stock exchanges”
Obsolete regulation of derivatives
Administrative interventions in the
commodity markets
www.case-ukraine.kiev.ua
Competitiveness Ukrainian securities are listed on western
stock exchanges Foreign investors cannot or unwilling to
penetrate Joint Stock Law Overregulated Capital Account
www.case-ukraine.kiev.ua
Capital Account Liberalization Restrictions: numerous, legislative acts of
different level, lack of systemic approach Securities trading (stocks, bonds,
instruments of investment funds) Money market operations Operations with derivatives Foreign investments, real estate
transactions Bank credits, guarantees, account opening Allocation of investment fund asset
www.case-ukraine.kiev.ua
Capital Account Liberalization Double asymmetry:
Outflows are more restricted than inflows Residents more than non-residents
Ukraine, Belarus and Moldova – CEE remaining capital account restriction areas
Russia and Kazakhstan – liberalization by 2007
www.case-ukraine.kiev.ua
Capital Account Liberalization Need to coordinate with transition to
inflation targeting Announce clear liberalization sequence
and implement it, 2-3 years Stock market operations, FDIs,
investment in real estate – early stage Money market operations – final stage
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Thank you
CASE Ukrainewww.case-ukraine.kiev.ua
10 Starokyivska Str., Suite 15 04116, Kyiv, UkraineT/f: (38-044) 483-2614