Depending on the form of ownership, they are divided into private and public.

Depending on the form of ownership, they are divided into private and public.


Consider the structure and functions of the banking system in a market economy. In such an economy, the credit and banking system is represented by a large set of banks and related various credit and financial institutions.

In the organizational aspect, the banking system is a set of interconnected and interacting banks, each of which performs functions arising from its purpose. There are issuance, commercial, investment, mortgage, savings banks, various financial companies (pension, social, innovative). Together, all these financial institutions form a bank credit system.

The banking system in Ukraine has a two-tier structure: at the first level – the National Bank of Ukraine, at the second – commercial banks.

The leading place in the banking system belongs to the National Bank of Ukraine (NBU). It is designed to pursue a common policy in the field of money circulation, strengthening the national currency – the hryvnia.

The National Bank of Ukraine is granted a monopoly right to issue money (issue). It acts as an emission center. The bank keeps reserve funds of banknotes, precious metals, including gold, foreign exchange reserves.

The National Bank of Ukraine serves the country’s public debt, gives permission for the establishment (registration) of commercial banks.

The content of the activity of the National Bank of Ukraine is manifested in its functions, the main directions of functioning. To perform the tasks assigned to this public administration body of special competence, the Charter provides for the following functions:

a) participate in the development of the main directions and trends of economic and social development of the national economy of Ukraine, the state budget of Ukraine, the forecast of monetary income and expenditure of the population; b) to develop the main directions of the unified monetary policy, in accordance with which the regulation of money circulation in Ukraine is carried out; c) concentrate credit resources created at the expense of statutory and other funds, balances of the state budget, funds on deposit accounts, funds in circulation and in interbank settlements, as well topics for a personal narrative as funds transferred by the Savings Bank, which are formed at the expense of household deposits; d) sell and buy credit resources on a contractual basis; e) to form a fund for the regulation of credit resources of the state banking system at the expense of part of the resources and deposits attracted by banks, to determine the size of the formation of this fund; f) organize and conduct collection, transportation of banknotes and other valuables; g) pursue a unified credit policy in the state, establish rules for settlements and cash transactions, the procedure for accounting and reporting in banks, determine the amount of fees for resources raised from other banks, based on the general interest rate policy; h) regulate the level of bank interest rates; j) to organize cash execution of the state budget; j) to concentrate on the accounts in their institutions the currency funds of the currency fund of the Cabinet of Ministers of Ukraine, to participate in the development of the consolidated currency plan, to ensure the implementation of a single monetary policy in the state; k) carry out public debt service, perform operations related to the placement of government loans, their repayment and payment of interest on them; m) give permission for the establishment of commercial banks with the participation of foreign legal entities and foreign citizens, register commercial banks and set economic standards for them, etc.

At the same time, the National Bank is granted the following rights due to its specifics:

to establish for commercial banks and their branches the volume and forms of reporting of information materials necessary for forecasting and planning for the purpose of implementation of the Unified state policy in the field of money circulation, crediting, calculations, securities and currency operations; to establish, in coordination with commercial banks that provide cash services to enterprises, organizations, the limit of the balance of money in the cash register, to determine the type of national banknotes, their denomination, to establish the defining features and order of payment, protection system; receive loans from foreign and international banks and other financial and credit organizations, place loans, carry out transactions in foreign currency; to give permission to organizations of Ukraine to attract loans from abroad within the general limit of external debt of the state, which is set by the Verkhovna Rada of Ukraine; determine prices and tariffs for services provided by the National Bank and its institutions, if they are not established by the legislation of Ukraine; to form enterprises under its subordination and to be a shareholder or shareholder of enterprises necessary for the performance of the tasks of the National Bank, including the production of paper money, the production of paper necessary for this purpose, the production of coins and other rights …

The legal status of the National Bank of Ukraine, its special legal regulation determines the implementation of specific banking operations. According to Art. 8 of the Law of Ukraine "On Banks and Banking" the National Bank performs the following operations:

issues loans to commercial banks for a term in agreement with borrowers; maintains accounts of correspondent banks and provides settlement cash services to commercial banks and other credit institutions; buys and sells securities issued by the state; issues loans to banks secured by promissory notes and securities; issues privatization securities; acts as a guarantor of loans provided to foreign economic entities by foreign banks, financial and other international organizations secured by the State Currency and other state property of Ukraine; buys and sells foreign currency and payment documents in foreign currency; conducts operations with reserve funds of banknotes; carries out other operations in accordance with its functions provided by law.

Issuing bank (central bank) – has a monopoly on the issuance of tickets (banknotes, banknotes). Its main task is to conduct state policy in the field of money circulation, credit, regulation of the entire banking system. This bank is always nationalized and its activities are under state control. Therefore, it is called the state or central bank.

Investment banks – specialize in financing and long-term lending to various enterprises and entire industries. There are financial investments made by the bank’s purchase of securities, as well as real investments made by investing in industry, construction and others.

Mortgage banks – specialize in providing long-term loans secured by real estate.

Innovative banks (or funds) – provide lending (mostly associated with some risk) at all stages of the innovation process of creation and implementation of various scientific developments.

Savings banks – are simple financial institutions to encourage free cash of the population, including securities transactions.

Commercial banks are the most universal type of banks engaged in a wide range of operations, including lending to industrial, commercial and other enterprises, mainly through cash in the form of deposits. Such banks also provide a variety of commercial services and operations. Of course, they are not state-owned.

Commercial banks

Commercial banks – the main link of the country’s credit system, which includes credit institutions that carry out various banking operations for their customers on the basis of commercial settlement. To do this, they use not only their own capital, but also borrowed financial capital in the form of investments, interbank loans and other sources. At the same time, borrowed funds, as a rule, significantly exceed the amount of equity of commercial banks.

At the beginning of their activity, commercial banks were created mainly as branch banks. Thus, Ukrlegbank, Ukrbudbank, Ukrmontazhspetsbank, Ukrmizhvuzbank, Energobank, Postbank and others were established in Ukraine. These banks were to help solve problems primarily within the industry, accelerate the pace of STP in the industry, increase production facilities and improve the quality of products.

The line ministries and their subordinate enterprises tried to mobilize as much money as possible for the development of the industry and become independent of the credit and financial policy pursued by the state through the so-called specialized banks – Prombudbank, Agroprombank, Zhitlsotsbank.

Gradually, state-owned specialized banks gained commercial status. Thus, Ukrsotsbank was organized on the basis of the republican Zhitlsotsbank, Agroprombank – JSB "Ukraine" JSC, Prombudbank – name. Such privatization of these banks led to the creation of unequal conditions for the activity of banks in the banking system of Ukraine, making the situation of the newly created ones difficult. After all, the former state specialized banks were provided with premises, office equipment, vehicles, personnel, and had a large and solid clientele. They are still receiving significant assistance from the state and the NBU. Newly established commercial banks did not have such a base.

It would be more correct for the former state-owned banks to leave the status of state-owned specialized banks, through which the state credit and financial (policy) support would be directed to the priority directions of economic development. Thus, in most countries, such support is provided to the development of agriculture, science, state-owned enterprises, housing and others.

In a market economy, significant changes have taken place in banking control. If in the past banks played the role of state controllers over the activities of economic entities, now this control is carried out on partnerships between banks and their customers. However, in some cases the state imposes on banks control over certain business operations of their clients. For example, the completeness of the delivery of proceeds to the bank in cash and the implementation of cash discipline.

Commercial banks are classified on a number of grounds. Depending on the form of ownership, they are divided into private and public.