A panel discussion on ‘The Reform Team - What They Have and Have Not Achieved and Why?’ was held as part of the 12th Yalta European Strategy (YES) Annual Meeting.
In her speech, Valeria Gontareva briefed the meeting participants on the central bank’s major achievements. “We have completed the clean-up of the banking sector. 54 banks have been placed into the hands of the Deposit Guarantee Fund and put into resolution. We have succeeded in putting an end to the so-called "oligarchic banking”, thus leaving no room for related-party lending in the future,” she said.
The panel discussion participants commended the swift pace with which the National Bank had adopted anti-crisis measures, in particular, in the banking sector. “No other country has managed to wind up a third of its banks within such a short period of time,” underlined Mr. Qimiao Fan, World Bank Country Director for Belarus, Moldova, and Ukraine.
Ukraine's Finance Minister Natalie Yaresko commended the efforts by the National Bank in this area. “My colleagues from the NBU have made impressive progress in cleaning up the banking sector,” she noted in her speech.
The internal transformation of the regulator is yet another achievement of the National Bank of Ukraine. “We have altered internal processes, cut administrative expenses by more than half, and reduced the NBU’s staff by 50%. Drawing on best international practices, we are turning the National Bank into a modern central bank,” said the NBU Governor. According to her, the regulator is to stage an international conference to share transformation-related experience with other central banks across the world.
The progress made by the National Bank in cleaning up the banking sector, as well as a successful completion of the debt operation provide reasons for being optimistic about the future. “We have stabilized the situation in the financial market, and thanks to the efforts by Finance Minister Natalie Yaresko the restructuring of sovereign debt has been completed, which would enable us to place public finances on a sound footing. We expect to see real economic growth in Ukraine as early as in a year's time,” Valeria Gontareva assured the audience.
All this has paved the way for the regulator to shift to a new monetary policy regime. The NBU intends to shift to a fully-fledged inflation targeting regime by the end of 2016. Of course, it will be done in close cooperation with the Ministry of Finance of Ukraine, as absence of fiscal dominance is crucial to the success of the monetary policy.
The experience of the last year has shown that all the first-stage reforms have been implemented successfully by the National Bank as planned. The NBU has already moved to the next phase of reforms - the phase of restarting the banking system, which we plan to complete within a year. “Last year I told the financial experts and my colleagues from other central banks about the challenges and problems facing the Ukrainian economy and Ukraine’s ailing banking sector and asked for their recommendations,” the Governor of the National Bank recalled. - They all replied that the task is impossible to accomplish. However, as it turned out, the mission is still possible - we have managed to do it!"