Page 17 - UKRRptJul20

“Does my resignation imply that the NBU has lost its independence? Not at all. My resignation comes as a protest. It is a signal and a warning that a red line is about to be crossed. As I step down as governor, I seek to warn politicians against further attempts to undermine the institutional foundations of the Ukrainian central bank. At this very moment, the NBU Board and several thousand top-of-the-line professionals continue to work at the NBU to promote the macroeconomic and financial stability of Ukraine and the institutional capacity of its central bank. However, it is crucial that their work goes on uninterrupted. It is imperative that the president, government, and political forces finally begin to work effectively with the central bank,” said Yakiv Smolii.
Yakiv Smolii was appointed NBU Governor on 15 March 2018. The following happened during his time in office:
– Inflation entered single-digit territory, reaching the 5% ± 1 pp target, and remained low.
– For the first time since Ukraine gained independence, the key policy rate has been reduced to 6%.
– An effective flexible exchange rate regime was introduced, and financial market infrastructure was modernized.
– Large-scale currency liberalization was launched.
– International reserves reached an eight-year high.
Today the banking system is healthy, highly liquid, and profitable. Not a single bank has been resolved since November 2018, and confidence in the banking sector is being restored. Furthermore, in the midst of the current crisis, the banking system has been an outpost of financial stability thanks to what had been accomplished on Yakiv Smolii’s watch since early 2018:
– Banks are adequately capitalized and constantly undergo stress tests.
– Macroprudential policy was introduced to shore up the banking system.
– Risk-oriented supervision of banks was launched.
– European banking standards were introduced.
– Financial monitoring was strengthened.
– Legislation was amended to improve the bank liquidation
procedure, while resuscitation of “zombie” banks was made
impossible.
– Disclosure of all bank owners was completed.
– Banks had the quality of their corporate governance improved.
– Protection of consumers rights in financial services was
introduced.
Under Yakiv Smolii’s leadership, the NBU became a regulator of the nonbank financial market, optimized the banknote and coin series, ensured that the share of noncash transactions increased to 55%, brought the launch of the NBU Bank ID to its completion, adopted the IBAN, and shifted the SEP into 23/7 operating mode.
During these two years, the central bank never stopped evolving as an institution, with the result that:
– Strategic planning of the NBU’s activities was enhanced (publication of the NBU Strategy, NBU Action Plans, and reports
17​ UKRAINE Country Report​ July 2020 ​ ​www.intellinews.com