Today is my last working day at the National Bank of Ukraine. That is why I want to bid farewell and thank all those who have supported the NBU on a difficult path toward reforming the country’s financial and banking system.
There are many people to whom I am grateful I have never seen: I can only guess who launched a campaign Save Gontareva in late 2014 that got 1,000 likes in the sea of hatred.
I never found out the name of the person who in the midst of war and destruction of our industry wrote: “Blaming Gontareva for the collapse of the hryvnia is as fair as blaming a stewardess for a plane crash.
That is a good point since we immediately lost 15% of our GDP and 30% of FX proceeds in Donbas. Our enterprises ground to a halt, while the infrastructure was completely destroyed. The balance of payments was “torn to pieces” and the exchange rate, which is the mirror of the balance of payments, responded accordingly,
let alone persistent, unsustainable imbalances in all sectors of the domestic economy and the banking system that had accumulated over twenty years of fake reforms. This also refers to empty treasury coffers, a one hundred billion gaping hole in Naftogaz's books and a large number of non-viable banks.What legacy am I leaving behind for my successor and why are there more than enough tasks on his agenda
It is only thanks to the international community, IMF, World Bank, EBRD, European Union and the US government that we were able to survive and stabilize the macroeconomic situation in the country. But we would not have been able to achieve this without stabilizing the budget and implementing energy sector reforms.
My mission is complete - all the tasks that I have set for myself have been fulfilled. The country moved to a flexible exchange rate regime and implemented the new monetary policy of inflation targeting. We have cleaned up the banking system from insolvent banks and enhanced its resilience. Furthermore, we have transformed the NBU completely, rebuilt all the internal processes and turned it into a powerful modern institution.
However, if my successor believes that not many unresolved issues are left to be addressed, he should not worry as there are more than enough tasks on his agenda.
We have completed two stages of the comprehensive reform and embarked on the final stage, which is aimed at ensuring the sustainable development of the domestic banking system. The Comprehensive Program of Ukrainian Financial Sector Development Until 2020 serves as a roadmap on this path. This progam includes a project designed to restore lending, the handling of nonperforming assets and a comprehensive cashless economy, as well as a draft of new FX regulation, including infrastructure development and capital market tools and other issues.
I will also ask my successor to urge the NBU and the Ministry of Finance of Ukraine to embark on implementing a new strategy for state-owned banks as soon as possible. This is a top priority task for 2017. A clear development strategy for state-owned banks, healthy competition and appropriate corporate governance are key to success of the domestic banking sector for many years ahead. We should not forget about the non-banking sector transferred under the jurisdiction of the NBU, which requires tremendous reform efforts. The new governor of the NBU will face overwhelming tasks.
I can’t help laughing when I look at pseudo-experts who, although understanding nothing about banking, are lamenting that liquidated banks should have been bailed out, banks that had neither assets nor capital and were used by their owners to siphon billions of dollars to their offshore accounts. I also marvel at pseudo-scientists who say that IMF recommendations are worthless, the NBU’s new monetary policy is unsound, and suggest reinventing a unique “yellow-and-blue wheel” specifically for Ukraine.
That is why the NBU should be governed by a professional unbiased banker. This person should have an understanding of how banks operate, what the notions of capital and liquidity are for, and why the Basel Committee elaborates all those prudential regulations for the banking sector.
The tide has turned: a new team of professionals and reformers is aboard a new ship, the NBU, and the macroeconomic sea has been calm for over two years. However, this doesn’t mean that things will be easy.
In a country with no system of justice, where political sharks bite each other until they draw blood, where those who want things to change for the better are drugged through the mud on all TV channels almost every day, and are greeted by coffins at their central entrances, one needs to have a lot of nerve and will power. In this light, I strongly advise you not to give up on the new NBU team, and to hold tight onto our 500 Spartans.
My resignation is my personal choice rather than a political decision. For the first time in the history of the NBU, this decision has nothing to do with politics. This is yet another proof that our country has embraced true democratic values. I tenaciously fought for the NBU’s independence during my three-year tenure.
Indeed, the NBU’s independence underpins financial and price stability, laying the foundation not only for an advanced European central bank but also for the country’s market economy on the whole.
My successor will inherit not only a thoroughly revised NBU law (the Law on the National Bank of Ukraine) which enshrines the central bank’s independence but also a completely reorganized institution, an institution with fully functioning supervisory, credit, financial stability, monetary policy and process management committees.
Today, international institutions hold the NBU as an example, sending central bankers from other developing countries to the NBU for training.
The NBU’s new structure underlies the central bank’s independence. No one at the central bank will be able to make decisions at theirown discretion any more. One-man shows are gone forever.
However, ahead lies the most important task of dealing with populist MPs who want to redraw the NBU law. Another task is dealing with ignorant officials and pseudo-academics who, deliberately or not, are playing into the hands of populist politicians.
Not long ago, my colleagues from other central banks told me that central banks were white knights. They begin reforms by safeguarding macrofinancial stability and cleaning up the market, delivering the right conditions for a new country to grow. Let’s believe in that!