MPs initiate commission to investigate National Bank activity

Ukraine’s parliamentary finance committee approved on
June 17 a draft resolution to launch an assessment of the activity of Yakiv
Smoliy, the governor of the National Bank of Ukraine (NBU), Interfax-Ukraine
reported the same day. The draft resolution, which will be submitted for a
vote, recommends that parliament create an investigative commission to examine
the activity of top management of the NBU and the Deposit Guarantee Fund during
2014-2019. It also criticizes the activity of NBU, alleging it “has not fully
fulfilled its constitutional functions – securing stability of Ukraine’s
currency” in 2014-2020. It also states the NBU’s monetary and credit policy
“negatively affected Ukraine’s economy” and stimulated the creation of a
“pyramid of OVDPs” (local government bonds), Intrefax-Ukraine reported.

At the same time, the finance committee failed to
include in the draft resolution any mention of the loss of reputation by the
NBU governor. By law, loss of reputation is among the few reasons for the NBU
head to be dismissed. The statement was proposed by MP Oleksandr Dubinsky,
among the fiercest critics of NBU activity and among the top allies of Ihor
Kolomoisky.

Alexander Paraschiy: The
committee’s move shows just how much its view of the NBU’s activity differs
from that of Ukraine’s Western financial partners, who have declared the
central bank to be the most successful institution in Ukraine. Yet it reflects
the mood domestically, where a lot of businessmen have suffered from NBU’s
activity on bank cleansing in 2014-2016, and where many attribute the currency
shocks of past years to allegedly inefficient NBU policy.

Parliament’s possible approval of the resolution
won’t have any direct consequences for NBU top management, except for
psychological pressure. But it will realize the fears of the IMF, reflected in
its June 9 press release, on “substantial uncertainty” about the direction of economic
policy in Ukraine. Recall, the
IMF has been very persistent in stressing the need to preserve the NBU’s
independence which, among other things, is reflected in the NBU’s top managers
keeping their positions. Therefore, as long as Ukraine is interested in
cooperating with IFIs, there is little risk for Smoliy to be removed.