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NBU Announces Further Steps Towards Increased Transparency In Communicating Monetary Policy Decisions

19 January 2018

Press Release


The National Bank of Ukraine intends to start publication of Summary of the Discussion Held by the Monetary Policy Committee (MPC) Members on the Level of the Key Policy Rate, which is aimed at enhancing transparency and predictability of the monetary policy decisions. It was announced during the NBU seminar organized for experts and participants of the money market and titled Practical aspects of the development and implementation of the NBU monetary policy.


Press releases on monetary policy decisions are the main communication tool in this domain and reflect a consensus position of the NBU Board” told the representatives of the Monetary Policy and Economic Analysis Department. However, seeking to enhance transparency of the monetary policy decisions, the NBU plans to start publishing outline of the MPC discussions preceding the announcement of the official decision. Such approach is practiced by leading central banks that have adopted inflation targeting framework. By publishing the discussion summary, the regulator leads market participants and experts in better understanding of the logic and rationale behind monetary policy decisions taken by the NBU Board. According to the regulator, market participants will be able to better foresee further changes in the NBU’s monetary policy. “This move is believed to strengthen the efficiency of the interest rate channel of the transmission mechanism and manage inflation expectations more effectively,” said Deputy Governor Dmytro Sologub.


The MPC is an advisory body within the NBU established to provide a forum for the exchange of information and opinions on monetary policy formulation and implementation to ensure price stability. The MPC consists of NBU Governor, other NBU Board members, heads of the Monetary Policy and Economic Analysis, Open Market Operations, Financial Stability and Statistics and Reporting Departments. The MPC meeting is held on the day before the NBU Board’s meeting on monetary policy issues.


The new document Summary of the Discussion Held by the MPC Members on the Level of the Key Policy Rate will present the impersonalized opinion of the MPC members regarding a monetary decision and the logic behind it. The document will be published on a regular basis in the Monetary Policy section of the NBU website on the 11th day after the monetary policy decision is made. The first publication of the Summary of the Discussion is expected on 5 February this year following the MPC meeting that is scheduled for 23-24 January 2018.


The NBU has also invited market participants to discuss possible changes in the instruments used in money and foreign exchange markets.


First, the NBU is set to streamline the methodology for calculating the official hryvnia exchange rate against US dollar. Currently, the official hryvnia exchange rate is calculated as the average weighted value for all interbank transactions per day based on ValCli data. (For reference, ValCli is proprietory software solution of the NBU used by banks for the approval of all their transactions on sales/purchases of non-cash foreign currency in the interbank market). The NBU considers it expedient to switch to using data from trading information systems (TIS) operated by Bloomberg and Reuters regarding real market transactions while disregarding transactions with extreme parameters. This will help to reduce reporting burden on banks thanks to the refusal from the mandatory registration of all transactions in ValCli system, according to Serhii Ponomarenko, the director of Open Market Operations Department.


Second, the regulator intends to switch to foreign exchange interventions using Matching, a new solution to enter into agreements in TIS. The solution, which implementation is being discussed with market participants, will consistently provide fixed prices for purchases and sales of foreign currency in the interbank foreign exchange market and allow to accelerate the conclusion of transactions for the best exchange rate parameters.


Third, Serhii Ponomarenko outlined further measures for liberalization of the FX market. “The priority in this area is a permission to repatriate dividends for 2017. It will be approved after analyzing forecast data from banks on customers’ plans to withdraw dividends. Also, the regulator may consider the possibility of further easing of restrictions on early repayment of loans.”


Presentations for the seminar:

·         NBU Monetary Policy: Objectives and Rationale Behind the Latest Decisions on Key Policy Rate;

by Sergiy Nikolaichuk, Director of NBU Monetary Policy and Economic Analysis Department, Volodymyr Lepushynskyi, Deputy Director of Monetary Policy and Economic Analysis Department

·         Set of Monetary Policy Instruments Used by the NBU in the Money and FX Market: Recent Changes and Near-Term Plans

Serhii Ponomarenko, Director of NBU Open Market Operations Department

·         Development of Financial Markets In 2017

Oleksandr Arseniuk, Director of NBU Office for Effective Regulation of Money Market

·         Fostering Trading of State Securities on Stock Exchange of Ukraine

Andrii Suprun, Director of Office for the NBU Depository Activity

Last modification   19.01.2018