Macroeconomic Effects of Introducing a Capital Conservation Buffer in the Ukrainian Banking Sector
a National Bank of Ukraine, Kyiv, Ukraine
b National University of Kyiv-Mohyla Academy, Kyiv, Ukraine
c Sveriges Riksbank, Stockholm, Sweden
Abstract

The National Bank of Ukraine (NBU) is planning to introduce a capital conservation buffer in the Ukrainian banking sector over a four-year period starting in 2020. This new regulation will yield long-term benefits by strengthening the resilience of the banks, which will reduce the likelihood and costs of financial crises. However, higher capital requirements in the form of a capital conservation buffer can also result in short-term costs by temporarily lowering output. In this study, we use a dynamic general equilibrium model calibrated to fit some long-term features of the Ukrainian economy to evaluate how different implementation strategies affect the short-term output loss. We show that the output loss can be reduced by preannouncing and gradually implementing the buffer, along the lines that have already been advanced by the NBU.

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Avaliable online 29 March 2018
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Cite as: Dadashova, P., Jonsson, M., Onyshchenko, H. (2018). Macroeconomic Effects of Introducing a Capital Conservation Buffer in the Ukrainian Banking Sector. Visnyk of the National Bank of Ukraine, 243, 33-42. https://doi.org/10.26531/vnbu2018.243.031
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