Is independence of National Bank of Ukraine under threat?
I was saddened to read that, according to Stepan Kubiv, first deputy prime minister of Ukraine, the Ukrainian government wishes to limit central bank independence.
At a time when the country needs more checks and balances on the actions of its politicians, there is a real threat that they will, in fact, be reduced.
The debate between central bankers and politicians is a recurrent global theme, but Ukraine’s current economic environment makes it a particularly crass place to have it.
Even when the debate has taken place in developed countries such as the United States (I think particularly about Paul Volcker, chairman of the Federal Reserve under the Carter and Reagan administrations and Alan Greenspan when he was chairman under Bush Sr.), I wholeheartedly side with the central bankers.
It is worth noting that Kubiv governed the National Bank of Ukraine for a short, sharp four months in 2014 when he gave Hr 68 billion hryvnia of refinancing to visibly collapsing banks without any serious oversight. Needless to say, many of those banks – Delta Bank, PrivatBank, VAB Bank, Kievska Rus, Ukrkomunbank, Financial Initiative, Zlatobank, BG Bank, VBR, Cambio, Eurogazbank, Finance and Credit, Fortuna, Diamant Bank, Porto-Franco, Sofiyskiy, AKB, UPB, Petrokommerts, PtB, Aktiv Bank, Terra Bank, and Unison – (to name a couple) have collapsed and more of the nation’s money was squirreled away offshore.