The National Bank of Ukraine (NBU) is the country's national bank and was established in June 1991. It has since assumed the function of a central bank. The commercial banking sector is dominated by the big five banks of Prominvest Bank, Ukrania, Ukreximbank, Eximbank and Oshadbank. Of these, Ukreximbank and Oshchadbank remain state controlled. As of 2001, Ukraine had 195 banks, but of these, only 153 remained in operation. Of these banks, approximately a quarter have foreign exchange licenses, and one-third are members of the Ukrainian Interbank Currency Exchange. It is generally acknowledged that Ukraine has too many banks and that there will be numerous mergers and failures in the coming years. In 1995 alone more than 20 banks went out of business, almost 80 changed ownership, and only eight new banks entered the market. Foreign banks, however, have been slow to enter the market.
The NBU implements monetary control through reserve requirements and the interest rates it charges banks on funds transferred from the state savings bank. Before November 1992, the NBU was able to obtain additional rubles by running a surplus on transactions with other republics in the ruble zone. However, with inflation accelerating since early 1991, the supply of rubles proved insufficient to meet the economy's needs, and Ukraine consequently resorted to the use of coupons. The resulting rise in inflation was the main factor behind Ukraine's enforced departure from the ruble zone in November 1992.
The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $5.5 billion. In that same year, M2—an aggregate equal to M1— plus savings deposits, small time deposits, and money market mutual funds—was $8.4 billion. The money market rate, the rate at which financial institutions lend to one another in the short term, was 16.57%. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 12.5%.
The Law on Securities and the Stock Exchange came into effect in January 1992. There are seven stock exchanges and seven commodities exchanges, although these are more like the auction houses that sprang up after the collapse of the Soviet Union in 1991 as conduits for goods rather than the securities exchanges found in the West. Capital markets are undeveloped even by the standards of countries such as Russia. The Ukrainian Stock Exchange (USE), established in 1992, acts to coordinate primary and secondary market trading of Ukranian securities. In 2001, the exchange had 131 companies listed and total market capitalization of $1.4 billion. Trading value was $226 million, with a turnover ratio of 13.9%