In pursuit of expanding its functions and powers, the NBU has turned into a discretionary body that hinders economic development and slows down lending. The mandate of its powers should be reduced to avoid cases like the one against Oleksandr Zyma, director of the NBU's legal department. This opinion was expressed in an exclusive commentary to UNN by Yaroslav Romanchuk, an expert, economist of the NGO "Right Liberal Movement", head of economic reforms at the Office of Simple Solutions and Results, president of the Mises Research Center .
Earlier, UNN learned from its own sources that the State Bureau of Investigation opened a criminal proceeding on the fact of possible abuse of power or official position, which led to serious consequences, by the director of the legal department, Oleksandr Zyma. The criminal case concerns a letter from the National Bank to the DGF signed by Zyma, who is also the chairman of the administrative board of the Deposit Guarantee Fund. In the letter, he recommended that the Fund drop four lawsuits that Concord Bank had filed against the NBU before the decision to liquidate the bank and introduce a temporary administration was made. The DGF implemented Zyma's recommendation.
"The issue is that the NBU is not only engaged in monetary policy, but also in supervising financial organizations, including those that deal with deposits. The system, in my opinion, is not sustainable, because not only the levers of monetary policy but also supervision are concentrated in the same hands. That is, a giant government that has no control, no checks and balances, which naturally pushes people to make dubious decisions, as in this situation (with Zyma - ed.)," Romanchuk said.
According to him, the mandate of the National Bank should be narrowed, as the regulator's main task is to ensure price stability, which is expressed in inflation. Romanchuk added that for more than 20 years, Ukraine has been the 13th country in the world in terms of inflation, meaning that, in his opinion, the NBU is not systematically fulfilling its main function of ensuring price stability.
He added that a situation has arisen in which the NBU has very broad powers, while the parliament, which is supposed to monitor the regulator's activities, does not do so. The Verkhovna Rada does not even have a monetary policy committee, which, according to the expert, is another absurdity.
"We need to correct the mistake in the architecture, because the NBU chased the expansion of functions and powers, and ran into the fact that it turned into a discretionary body to hold back economic development and slow down lending," Romanchuk said.
The expert emphasized that there is no understanding of the functions of the National Bank of Ukraine abroad.
"When I talk to my colleagues from the US, the EU, academics, and friends, they don't understand why the NBU behaves like a regulatory structure, not like a structure that needs to do its job. Let's say you were hired as an engineer, and you are supposed to take out the garbage. Therefore, there is a misunderstanding of why the NBU allows itself to do this. Why it can draw up any criteria and say: we have such functions, we failed to achieve inflation and lending, but deposits are 100% compensated. This is not professional. Any structure should be evaluated according to specific criteria. Here, the NBU's performance parameters include inflation, of course - I have already said that only African countries and Belarus are worse than us - credit market development - we are also in the second hundred countries here, financial openness - we are the last in the world at 169 in the financial openness index, and access to credit - also in the second hundred. Whatever criterion you use to evaluate the NBU's performance is bad. That is why they should be engaged in their direct duties, and not act as a regulator of everything and everyone," the expert summarized.
Recall
Despite the war in Ukraine, the process of removing banks from the market has not stopped. Thus, since February 24, 2022, the liquidation process has been initiated against 8 banks. Last year , for the first time in Ukraine, not only bankrupt banks but also profitable institutions were subject to liquidation and license revocation, including Concord Bank. The process of depriving a banking institution of its license takes place without a court. Of course, owners and shareholders of banks may appeal against the decision of the regulator, the NBU, after it has made a decision to liquidate the bank, but in general, the process of withdrawing a banking institution from the market, once started, is irreversible.
In addition, the issue of liquidation of a profitable bank has not been regulated in Ukraine. According to Olena Sosedka, co-owner of Concord Bank, at the time the regulator announced the decision to liquidate the bank, the financial institution had enough highly liquid assets to make all the necessary payments in 2-3 weeks. But the process of bank liquidation is strictly regulated by law and can generally take up to three years.