At national Bank new head: is there cause for concern

У Нацбанка новый глава: есть ли повод для беспокойства

The new head of the NBU, the Parliament has appointed professional banker from the state Bank Kirill Shevchenko. His leadership depends on the further policy of the Central Bank and its impact on the economy of our country.

Thursday, 16 July, Parliament appointed a new head of the National Bank of Ukraine. This event was of great interest not only in our country, but also abroad. After all, it was preceded by loud resignation of the previous head of the NBU Yakov Smoliy, who said about the systematic political pressure on the national Bank, which has raised concerns from major international partners of Ukraine, not just underlining the necessity of preserving the independence of the Central Bank.

After the resignation Smoliy, the main intrigue was connected with the President of the candidacy of the new head of the NBU. And although at this stage the specific names of the President’s Office has not officially been named, but the name of Kirill Shevchenko, not so known in wider political circles, sounded in the mouth of experts almost immediately.

Shevchenko is a professional banker, working in this field for more than twenty years, and his track record is pretty impressive. He worked in different banks, and his first major position was as Deputy head of Board of Bank “Finance and credit”. In 2004, the banker led the State mortgage institution.

In 2009 he was an adviser to then Prime Minister Yulia Tymoshenko. In the same year he was a member of the Supervisory Board of “Ukrgasbank” after its nationalization. In 2010 he co-founded “Terra Bank”, which was then sold. Until the fall of 2014, Shevchenko worked as the adviser of the head of Board of “Oshchadbank”. Later Kirill Shevchenko returned to the majority position of the first Deputy Chairman of the Board, and 2015 holds the position of Chairman of the Board of the Bank.

To the professional qualities Kirill Shevchenko of questions, it seems that the banking community does not occur but to the fore concerns about preserving the independence of the main financial Institute of the country under the leadership of the new head of the NBU. And the key creditor of Ukraine – the international monetary Fund, and the ambassadors of the group of Seven has repeatedly stressed the need to further ensure the independence of the national Bank, stated in the Memorandum on cooperation between Ukraine and the IMF.

The promise of the first banker of the country

Himself Kirill Shevchenko at the meeting of the parliamentary Committee on Finance, tax and customs policy before making its nominations to the vote in the Verkhovna Rada, answering questions of deputies, has promised not to allow runaway inflation or issue. He also stated the need for continued cooperation with the IMF and other international financial partners, and the main task assigned to him by the President, called the preservation of the independence of the national Bank.

Speaking in Parliament, Shevchenko said that the national Bank for the past six years, walked the path of institutional development.

“With the support of our international partners was built independent Central Bank, which ensures the macroeconomic stability of the banking system and the economy. During the last event of quarantine, the banking system has proven its maturity, what certainly had a big role of the regulator. Ukraine’s economy starts to emerge from the restrictions during a quarantine, but continued stagnation”, – said Shevchenko.

He stressed that he supports the policy of the NBU aimed at ensuring macro-financial stability and sustainable development of the banking system, and noted that the national Bank will continue measures to strengthen the financial sustainability of operating banks in Ukraine.

Expert evaluations

The promises of the new head of the NBU was optimistic, however, not all experts the financial sector, understanding the complexity of the challenges facing the country’s economic challenges, it is divided.

Investment banker Sergey Fursa noted the professional quality of Shevchenko, calling it a “quiet non-public professional,” but expressed doubts as to his independence in his new job.

“The question is not about him personally. It’s not a question of personalities. The main thing is that he will obviously be dependent on the candidate. So, the NBU policy will change. So, the desire of the Office of the President will be the priority,” wrote Fursa.

Executive Director at CASE Ukraine Dmytro Boyarchuk believes that the new NBU head is a weak person and, in his opinion, now the monetary, exchange and credit policy will be resolved in the Office of the President.

“Maybe it would have looked through his fingers in Ukraine 90 years, when all institutions are still forming. For Ukraine 2020, the year is a huge step back. The powers of the head of the NBU – seven years precisely in order to change the leadership do not overlap with political cycles. This is one of the pillars of the independence of the monetary authorities, and he was violated,” – said Boyarchuk.

According to the expert, the IMF and other international partners now put Ukraine on a break and will monitor the situation.

“I think that at least until December no movements from the IMF will not. For investors too, this whole story is a red signal. All cooperation with Ukraine last year is based on the assumption that Zelensky will not climb to the NBU. The assumption is violated, the limits now in Ukraine will be closed until better times. The name of the head of the NBU in this situation is not important. It is likely that the funds that were wound up in Ukrainian bonds last year, will be displayed, if possible,” – said Boyarchuk.

The expert believes that the position of creditors may be mitigated if the rate of NBU in the near future will not differ from the policy of the NBU times predecessors Shevchenko.

But the ex-Minister of economic development, trade and agriculture, President of the Kyiv school of Economics Tymofiy mylovanov considers the candidacy Kirill Shevchenko “best choice” from the possible to date. However, he notes the importance of having a clear position of the new head of the Central Bank about what will be the policy of the national Bank in the future.

“For the country’s economy and business stability is important, it is the continuation of politics, which led the previous heads of the national Bank. I hope it will be. It is clear that some changes in the policy of the NBU is to be expected. It may be some easing of monetary policy, a slightly different approach to exchange rate policy,” – said Milovanov.

However, in his opinion, must continue the policy of inflation targeting aimed at maintaining low inflation and balanced policy in cooperation with the government, in particular, preventing the financing of budget expenditures through the direct emission.

“Should also remain the achievements of the past five years, the reinforced supervision of banks, and now for nonbank financial institutions, strong HR policy in the Central Bank, which helped to build a strong institution. I hope it will happen,” said Milovanov.

As can be seen, the estimates of experts vary somewhat, but all agree on the need to continue the current rate of the national Bank and the preservation of the “island of stability” in a time of economic turmoil and coronaries and maintain the support of international financial partners.

The expectations from the activities of the new head is high, and the cost of failure may be too high for a weakened coronariana of our economy and the welfare of Ukrainians.

Catherine Giri

У Нацбанка новый глава: есть ли повод для беспокойства

У Нацбанка новый глава: есть ли повод для беспокойства

The Verkhovna Rada
The government