THE ROLE OF THE BANKING SECTOR IN ENSURING MACRO-FINANCIAL STABILITY IN UKRAINE IN THE CONTEXT OF LIMITED EXTERNAL CAPITAL

Abstract

This article substantiates the importance of building a solid financial foundation to ensure security, defense, and social needs in Ukraine, as well as entering the post-war recovery trajectory. It is noted that this requires a strategic reorientation of financial policy towards mobilizing domestic resources, considering the current realities. The complexity of this task is due to the accumulation of systemic problems linked to the loss of stability in the national economy and significant restrictions on external sources of financing caused by military actions and geopolitical instability. A special emphasis is placed on the role of macro-financial stability of the financial market, particularly its banking segment, given the leadership of banks in the asset structure of key financial institutions. The author highlights the urgency of evaluating implemented reforms, clarifying causal relationships that determine the state and further development of the banking sector, including the use of relevant financial instruments and making appropriate management decisions. The key factors that contributed to the resilience of the banking sector during the COVID-19 pandemic and the full-scale military invasion in 2022 are identified. At the same time, the need to strengthen the internal resilience of the banking system in this context is outlined, given its importance for ensuring macro-financial stability. Noting the role of the domestic debt market in accumulating financial resources within the country, the author emphasizes that banks increase their issuance of debt securities mainly through instruments issued by the state. This allows the government to maintain macro-financial stability without critical dependence on external creditors. The effectiveness of this approach lies in transforming banks from mere financial intermediaries into crucial instruments of budget support, which also warrants a positive assessment of their potential role within the strategic reorientation of financial policy toward mobilizing domestic resources. The process of displacement of corporate sector debt securities from the domestic financial market is discussed, which is associated with the shortage of resources in private business and its reduced contribution to the formation of the country's financial base. It is emphasized that principles of balance and adaptability to domestic economic realities and global financial environment fluctuations should underpin the strengthening of the country’s financial development capabilities. An essential part of this task involves clarifying interrelations, identifying contradictions, and seeking appropriate compromises to balance the interests of individual economic entities, particularly banks, thus enabling the full realization of the potential of financial institutions to achieve this strategic goal.