Refinancing of commercial banks is one of the instruments of monetary policy and is based on the functions of the central bank as a “lender of last resort”. Its essence at the micro level is to maintain the liquidity of banks, and at the macro level – to expand the money supply in the country’s economy. In most cases, refinancing is secured by domestic government bonds. As generally known, this type of securities is considered to be the most highly liquid collateral. This guarantees to the Central Bank in the repayment of refinanced funds, in particular in the case of classifying the borrowing bank as insolvent. This is especially relevant given the recent crisis in Ukraine and leading to the loss of banking institutions. During 2014–2018, the National Bank of Ukraine initiated the filing of 115 lawsuits to repay insolvent banks’ debts under refinancing agreements. The total amount of claims is UAH 37 billion. Almost half of the cases have already been approved and are being enforced.

            However, some legal contraventions regarding the procedure for the sale of mortgaged property under refinancing agreements (in the case of classifying the bank as insolvent), significantly complicate the process, lead to re (under new circumstances) consideration of cases and delay the repayment of previously provided funds. This, therefore, has a negative impact on the state and size of gold and foreign exchange reserves of the National Bank of Ukraine.

            The analysis of various aspects of the implementation of the monetary policy of the state, including the features of refinancing of commercial banks, has become the object of attention of many both domestic and foreign scientists. However, today there are still some problems, regarding the priority of application of the norms of various legislative actsin the procedural issues of repayment of such funds in case of classifying the borrowing bank as insolvent. This highlights the need for further scientific research in the appropriate direction.

            The methodological basis of the study were modern methods of cognition: formal-logical, analytical-synthetic, logical-legal and others. The formal-logical method was used to analyse court practice, as well as regulations governing relations related to refinancing banks and the insolvent bank’s fulfilment of its obligations to creditors. Logical-legal method revealed inconsistencies in the current legislation of Ukraine the field study and justify suggestions for their elimination.

            In the analysis the authors concluded that the courts in disputes over the fulfilment of their obligations to creditors by an insolvent bank, which introduced a temporary administration and / or liquidation procedures implemented, should take into account the priority of the Law of Ukraine “On the Individual Deposit Guarantee System” in relation to other legislative acts of Ukraine in such legal relations.

            During the analysis, the authors came to the conclusion that courts in disputes over the performance of an insolvent bank, which introduced a temporary administration and/or liquidation procedure, its obligations to creditors, should take into account the priority of the Law of Ukraine “On Deposit Guarantee System” concerning other legislative acts of Ukraine in such legal relations.

Bibliography

Journal articles

1. Onyshchuk M, ‘Koliziyi u zakonodavstvi Ukrayiny: prychyny ta shlyakhy podolannya’ (1996) 7 Pravova derzhava 99 (in Ukrainian).

Websites

2. Kapatsyn A, ‘Sudochynstvo: Skasuvannyu pidlyahaye’ <https://ua.112.ua/statji/ kvartyrne-pytannia-naskilky-zrostut-tsiny-na-zhytlo-v-2019-rotsi-476502.html> (accessed: 20.04.2020) (in Ukrainian).