Dear Ukrainians, dear colleagues!
I point out with great pleasure that yesterday, institutional independence of Ukraine has been strengthened by the Verkhovna Rada of Ukraine decision. I welcome the adoption of these absolutely necessary amendments to the law on the National Bank of Ukraine, and I am sincerely grateful to the members of Ukrainian Parliament for their constructive work.
This is the victorious result of the joint yearlong efforts of the NBU, Parliament and International Monetary Fund, and our next decisive step towards the European Union. It should be considered not only in terms of today, but also as a strategic decision for many years. Now, the National Bank has a possibility to pursue an independent monetary policy and to increase the effectiveness of its functioning as an institution. For the first time, the National Bank of Ukraine Board gets the right to delegate some of its powers to separate committees. Thus, the management system is being transformed from making individual decisions to the decisions made by the committees, which bring the regulator closer to the best practices of world central banks. We have already established monetary policy committee, credit committee, committee on transformation and strategic issues, committee on assets and liabilities management, etc.
It is symbolic that the law strengthening the institutional independence of the National Bank of Ukraine was adopted on the eve of the first anniversary of my tenure as the NBU Governor.
Today is a year since my appointment to this important position. What has been done during this time, and what are our future plans?
We have already introduced extremely complex and extremely important things. Firstly, we have shifted to a flexible exchange rate of the hryvnia and almost balanced the current account and, consequently, our balance of payments on the whole.
We are gradually taking out the “rate hook" from consciousness of people and businessmen who already understand that a fixed exchange rate of the hryvnia was the death of our economy. Now, moderate exchange rate fluctuations are not perceived as "doomsday" and do not provoke panic behavior.
Secondly, we have dramatically changed and improved the "portrait" of the banking system.
Thirdly, we have transformed and updated the NBU structure.
On this way, international financial institutions have helped us greatly. The resumption of cooperation with the International Monetary Fund and the World Bank has allowed the economy to stay "afloat" in catastrophically difficult conditions.
Now we can confirm that we have withstood the challenge of the hryvnia rescue, almost equilibrated the external position of Ukraine, liquidated the lion’s share of criminal schemes of the capital withdrawal from Ukraine, and made our banking sector much healthier.
We have stabilized the situation in the financial market and almost completed the first stage of banking system reform - we have cleared it of insolvent banks.
We are finishing the first phase of recapitalization of the banking system.
We have stopped the practice of money laundering within the banking system, the level of which was estimated by hundreds of billions of hryvnias per year.
We have brought to a stop the concept of "oligarchic banking” that flourished in the country during the last twenty years.
We have increased the responsibility of management and banks’ owners for the performance of their financial institutions, for giving unreliable reports and lending to related parties.
We have improved the procedure of disclosure of banks’ ultimate beneficial owners. Now, it is not just the disclosure of information about shareholders and owners, it is the end of irresponsibility. Now, we have someone personally responsible for bank’s destiny.
Having taken the responsibility for the regulator’s work, we started with the restructuring and cleaning of the NBU itself. I am very pleased to hear that now the National Bank team is a dream team. And this is true! This is really a team of powerful and uncompromising professionals who are carrying out drastic restructuring in all the areas of our business.
To a large extent, our team has launched a challenge to the ineffective system within our country. We work hard, because we realize that only revolutionary changes in the financial market will give the public a chance to live in new Ukraine.
We continue to go towards our goal - financial stability in the country and the reliable banking sector with renewed confidence of our population.
Assessing the results of what has been done, I can confidently say that the NBU has already passed the point of no return to the old system. As we have not only created a new team and updated laws on increasing institutional independence of the NBU, but also changed the rules, procedures and internal processes of the regulator, which is very important. Therefore, this process is irreversible and will not depend on who heads the regulator.
And I'm proud of it! I think it is the major achievement of our restructuring and main protective mechanism preventing the return to the old corrupt and bureaucratic regulator of the banking sector.
As you know, we have a Program of financial sector development up to 2020, approved by the National Reforms Council, which we persistently introduce and implement.
We are finishing the first stage of the reform of the banking sector viz. cleaning the system from insolvent banks, and are turning to the next stage - the stage of restarting the banking system, the stage of qualitative changes.
Its targets are as follows: focusing the monetary policy on inflation stabilization and formation of its downward trend; active accumulation of international reserves; further strengthening of the banking system and regaining of depositors’ confidence in general.
In a year, we plan to move to the third stage of reforms - the stage of the sustainable development and growth of the banking system. We also plan to enter the trend of gradual development of capital markets, growth in assets within the financial sector, and increase in domestic and foreign investment.
To the effect, we need a gradual removal of administrative restrictions. We have already agreed with the IMF a schedule and conditions for the gradual liberalization of the both FX and deposit markets.
We realize that today Ukraine more than ever needs investment resources, but we also understand that along with economic benefits investors are primarily concerned with the protection of their interests and stability.
So today, the issues on the agenda are as follows: strengthening the protection of creditor rights, improvement of bankruptcy procedures of joint stock companies (including banks and their debtors), further settlement of procedures of banks’ capitalization and restructuring, and strengthening the protection of individual depositors.
Dear Ukrainians, colleagues! I love Ukraine and, just like you, want to see her as a peaceful, happy and rich country to be highly regarded in the world, which not only attracts investors from around the world, but invests in its development itself and is involved in large-scale global projects.
Building-up the central bank that is open, independent from the political situation and integrated in the European society of central banks is a prerequisite for such development.
We believe that the National Bank of Ukraine has to become the real Bank of the Nation.
I am confident that we will succeed. We are going the right way, it's not just my opinion, but the opinion of the international community.
I believe that we will soon have an updated effective banking system, high-quality banking services, available credits, and this will be the path to building a new European country.
Today we need to work hard and learn to trust each other. The process of reforming is very painful. I assure you we will not stop, because we do not have the right, as all of us understand that today we have no other way to a market economy, except the way through reforming.
This way is irreversible and without alternatives for both Ukraine and the National Bank.
Your confidence, support and help are extremely important and necessary for us in the implementation of reforms.
Together we will succeed!
Glory to Ukraine!