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National Bank of Ukraine after Mrs. Hontareva

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Yakiv Smoliy, the acting National Bank of Ukraine`s (NBUhead, and Volodymyr Lavrenchuk, the chairman of the board of ‘Raiffeisen Bank Aval’, claim to be the head of the NBU. CASE Ukraine`s Executive Director Dmytro Boyarchuk estimates in the article for the ‘Novoye Vremia’ website a development of the regulator by each of the candidates.

According to the expert, Lavrenchuk is a person who understands the banking sector. Perhaps, he has some new ideas for the work of the NBU. But radical changes in the work of the NBU and the reverse trends in reforms will not happen, the economist says.

What has already been done is transition from a fixed rate to a quasi-fluctuating. Now it is moving towards more serious liberalization. Also, clearing the banking system was completed: this is a huge step.

From the user’s point of view, the changes were painful. Several waves of shock devaluation, many banks have left the market with serious losses. But if you judge from an economist’s point of view, I think, there was a huge breakthrough. It’s hard to assess now, but the floating exchange rate is the foundation on which one may build long-term sustainable growth. This sacrifice will be evaluated in the next 5-10 years. We say ‘sacrifice’ because the person who does it in the public space actually kills himself.

Banks felt unpunished – a taxpayer or a client was responsible for everything. This practice was even worse than even theft. If currency problems start, banks quickly became involved, knowing that they destroy the foundations of the economic system, but earned very well.

The system was extremely cleaned up, and this is a huge step.

November 20, 2017