Yakov Smolley was named the Best Central Banker in Central and Eastern Europe in 2019
Yesterday, 1 July, NBU chief Yakov Smoly submitted his resignation. The reason he called for systematic political pressure on the National Bank. The banking community and many experts reacted to this news with disappointment and fear. The President’s Office said that the discussion about the activities of the NBU should be “completely based on principles of professionalism and devoid of political color”. At the same time, several representatives of the Servant of People’s faction, notably Maxim Buzanski and Alexander Dubinsky, welcomed Smoly’s resignation. “Happened! And this is just the beginning,” wrote the latter on his Telegram channel. And there was news on his website that Dubinsky reportedly “received Smolly’s resignation.”
Be that as it may, the reasons for the departure of the head of the NBU are clear. But what can be the consequences for Ukraine? Many experts are not sure the main fear – National Bank will lose its independence
1. Launch of “Printing Press”. After taking over as the new head of the NBU, the regulatory strategy and monetary policy are likely to change. In particular, funds can be used extensively for budgetary needs.
Deputy Executive Director of IMF
2. Inflation. The implementation of the previous paragraph will result in inflation. According to the forecasts of the chairman of the investment company Univer Taras Kozak, inflation could be 20% and higher (the previous forecast is 5% by the end of 2020). And the poorest people will suffer the most from it.
3. Investor’s departure from Ukraine. For investors, an independent central bank is a definite marker of stability in a country’s financial system. It is an opportunity to predict something. And if it is not a marker, if the head of the regulator declares systematic political pressure, then there can be no point of stability.
Tomash Fiala, CEO of Dragon Capital, an investment company, has already announced that it is suspending new investments. In his opinion, Ukrainian property prices will fall, and so will hryvnia.
CEO of Dragon Capital
4. Violation of cooperation with IMF and deterioration of Ukraine’s image in the international arena.
This entire situation arose after reaching agreements with the IMF. And now the Ukrainian government looks like a “fast”, which not only fulfills its own soon after the partner completes part of the agreement, but also violates them demonstrably.
Chief Economist Dragon Capital, Member of the Volkskrain Editorial Board
5. Return of corruption schemes. Experts suggest that this is one of the scenarios for further development of events in Ukraine. In particular, we are talking about the return of Privetank to the previous owners and the return of the Ukrainian oligarchy bankrupt banks to the market.
The former head of NBU Valery Gontareva also spoke about the resignation of Jacob Smolley.
Former head of the National Bank of Ukraine
Paypal magazine help
According to the NBU, in the second quarter of 2020, three new participants joined Ukraine’s money market, among them also postal operator Ukroposta. During this period, the regulator issued a license to FC Tiger Invest LLC to conduct currency transactions in cash-for-money valuables, as well as expand FC ProFinf LLC’s list of currency transactions to trade in cash currency. In addition to, to transfer funds. .
Read: How 2020 will change the Ukrainian banking market: Interview with Alexey Shaban, NBU