The resignation of Yakov Smoliy: what will be the new course

Experts call different causes of conflict with the head of the NBU, but we are sure that the disasters will not

The beginning of the second half of 2020 was marked by an unexpected change in the Ukrainian financial sector. On 1 July the head of the National Bank of Ukraine Yakov Smoliy wrote the application about addition from itself powers.


Despite the fact that talks about possible change of leadership of the NBU went from the very first days of his presidency, Vladimir Zelensky, the resignation of Yakov Smoliy right now was a surprise even to many experts. As for public outcry, it was huge. The national Bank in recent years were perceived by society as an island of stability and reliability in any economic cataclysms. To ensure that the Ukrainian financial system will be able to pass the current crisis without special shocks. The change of leadership of the Central Bank in such a difficult period in the midst of crisis, on the contrary, is perceived as the destruction of the foundations of economic stability and confidence of people in the future.

“Over the years, when in Ukraine were the financial and economic crises, people have a distrust of the banking system. They saw that many investors suffered when banks were withdrawn from the market… But today, the banking system is another. We spent a lot of work to improve it and increase its transparency. To this end, we began to publish detailed statistics about the financial condition of banks, their implementation of norms. That is, the population has enough information about each of the 77 operating banks in Ukraine in order to make an informed choice. This set of measures is part of our contribution to improving the confidence in the banking system, so that people returned these funds to the banks, and they can direct them on crediting”, – said Yakov Smoliy in an interview with “Today”. And with the result of the works of the national Bank and its head will not argue.

Jacob Smoliy, actually headed the national Bank in 2017 (first as acting, from 2018 – as the head of the NBU), the reason for his departure has called a “systematic political pressure”that took place “a long time”. Who exactly was pressuring the head of the NBU, he did not elaborate. But accusations of trying to exert pressure on the NBU sounded in the address of the President, and against some former Bank owners (in particular, PrivatBank) and the Council of the NBU.

The website “Today” has asked experts about the reasons of resignation and the possible consequences.

The reasons for conflict: political, economic, communication


The fact that conflicts existed, the experts do not dispute.

“Smoliy’ve been going aside for the reason that he in any way associated with the previous ruling team. And there not going anywhere. Since the national Bank is one of the key positions, as long as he sooner or later had to leave,” – says doctor of economic Sciences, head of the sector of institutional Economics, Institute of Economics and forecasting of NAS of Ukraine Oleg Yaremenko.

Economic expert Boris Kushniruk said that the resignation of Yakov Smoliy best hurt the bankers. In particular, the “Private group” it is extremely important to “dump” the independent leadership of the national Bank and put in there.

“And for two purposes. First, for the sake of enrichment. And secondly – that these people might have played back the story with PrivatBank. And played not so from the point of view of return of the Bank as from the standpoint of information component. To declare, for example, that nationalization was a wrong that PrivatBank nothing broke and it was all good. And this he must do in court cases in Ukraine and to try to resolve the situation in the UK and the USA, where he conducted the investigation,” – said Boris Kushniruk.

The existence of differences of the NBU Board and the Board of the NBU said the head of the Council Bohdan Danylyshyn.

“In particular, the results of the meeting of the Council held on 30 June 2020, it was decided that toughening of monetary-credit policy of the National Bank in 2018-2020 led to a significant deformation of economic incentives of activity of the banks and reducing lending to the economy”, wrote Bohdan Danylyshyn on Facebook.


Later the head of the NBU Yakov Smoliy said that he was referring to political pressureon the Central Bank. In particular, he called the recommended by the parliamentary Committee on Finance, tax and customs policy of the draft resolution on the evaluation of the head of the NBU, lawsuits and decisions and received from the 64 deputies to the constitutional court of Ukraine on compliance of the Constitution of the banking law, necessary for cooperation with the IMF.

Another element of pressure Yakov Smoliy called frequent public criticism of the Central Bank from the NBU Council and Bohdan Danylyshyn.

We see a direct political motivation behind the positions and actions of some individual members of the NBU Council, particularly the head. I remind you that the head of the Council has repeatedly and publicly expressed its position regarding negotiations with the former owners of PrivatBank, de facto, for the return of their already healthy Bank, which the state has capitalizable, “–said resin.

Advisor to the President Oleg Ustenko in comments to the website “Today” the cause of the incident called “lack of communication”.

“Returning to the question of political pressure, I think, due to the fact that the national Bank built a normal communication strategy, it could be an illusion that it misunderstood. But when you want to be understood, you have to tell what you’re doing and how you’re doing,” said Oleg Ustenko.


The independence of the NBU is one of the requirements of international financial partners of Ukraine. And after the appearance of the application Smoliy the ambassadors of the countries “Big seven” urged the Ukrainian authorities to preserve the independence of the NBU.

However, experts wonder: what constitutes independence?

“We have to understand that the control of the NBU – is a constant practice of our political “Byzantine”. What kind of political independence we can say, if we remember that Gontareva and resin – it was actually people Poroshenko, people from his team,” – says economic expert Alexei Kusch.

Issue, inflation, exchange rate

Economic impact statements Jacob Smoliy resignation not long to wait. The next day the dollar exchange rate soared above 27 UAH, which was not since the panic of coronaries. The Finance Ministry canceled a bond offering 1.75 billion dollars. How serious can be the consequences of the change of the head of the NBU?

“It is clear that the financial market does not like is not welcome and is afraid of any changes. Not only in Ukraine, in any country of the world. Therefore, we expect that the market may panic over the next several days. But it is also true that as soon as you made the appropriate appointments and statements that monetary policy will remain in the same vein, I think the market immediately will calm down” – says Oleg Ustenko.

As to more remote prospects, Oleg Yaremenko, for example, sees as a potential negative, and positive.

“The positive is that now formed a functional unity of financial and monetary block. And negativity can be associated with certain calculations and plans of the International monetary Fund. Since the resin were somehow connected with obtaining these loans, with the cooperation, participated in the drafting of the Memorandum. And when that person leaves, it certainly is not good”, – says the expert.

Boris Kushniruk says: if the Fund receives evidence of a breach of the independence of the NBU, Ukraine could lose international financial aid, and then you have to include the “printing press”.

“Imagine the situation if our Western partners have ceased to give us loans and aid – for example, that we have violated the independence of the national Bank. Then the question arises: how to Finance the budget deficit? It is possible to Finance or due to the issue, and issue hundreds of billions of hryvnia, or, excuse me, to close all government funding, and then there will be a disaster. That is, the reaction of “today for tomorrow” will not. But it may come back to haunt the economy quite quickly,” said Boris Kushniruk.

Turn on whether the “printing press”?

One of the issues on which there was disagreement between the leadership of the NBU and a number of experts was the question of the issue. The supporters of money printing argue that it will help to accelerate inflation and heat up the economy. Like many States during the current crisis have resorted to concealed or open issue.

Opponents a major issue afraid that if times to start, then it will be hard to stop, and as a result unable to hyperinflation, as it was in the 90s, with all the consequences: the rising costs of products, depreciation of wages, impoverishment of population, etc.

Experts do not deny: additional issue of money in connection with the crisis will be. Moreover, the issue is, we can say already being. However, the fear of a repetition of the ‘ 90s is not worth it.

Note that before the money is really “published”. Cash. Now they are produced primarily in electronic form. The issue can be conducted several ways. By buying up securities (this method was used a few years ago, but now the NBU for him is no longer used), by refinancing banks, by currency purchase on the interbank market (these instruments were used before and use now, the question is, to what extent).

“The issue will still be. Hidden or open issue now goes in all countries, and actively involved. In our case, I would expect it to be a hidden issue, and there is not exactly the question wants it resin or not. It’s just objective reality. A hidden issue is already a specified parameter and is not even discussed. But what does “untwist inflation”? Today it slowed to less than 2 percent annually. On the one hand, the reason for this is the tight monetary policy implemented by the national Bank. And on the other hand is a reaction to economic problems in the country. The country is in such bilateral hook. On the one hand, coronaries, on the other hand, the economic crisis. And this bilateral hook is one of the catalysts that reduced inflation. Because reduced consumption. It is rather not the result but an indicator that there are economic problems. And I will say it again: all use the mechanism of open or hidden issue,” – says Oleg Ustenko.

However, the fear of hyperinflation there is no reason, says an expert.

“The nature of inflation in the 90s was completely different. It consisted in the fact that the budget deficit in the period exceeded 30% of GDP. And it is completely quenched by simply printing money. Then do inflation reached 10 000% per year. But now the budget deficit is only 7.5%. Yes, it is three times more than the original forecast, because of coronaridine had to increase the deficient area. But anyway, this deficit is easily funded from external sources and by borrowing from international financial institutions. 7.5% is about $ 10 billion. And we have only the program with the IMF signed about $ 4 billion. 1.2 billion should come from the European Union, about 700 million should come from the world Bank. Well, the extra money that you may borrow the Finance Ministry is all fully covers the deficit,” – says Oleg Ustenko.

Experts believe that with the change of the head of the NBU monetary policy in Ukraine will remain mostly unchanged.

“I believe that Zelensky is now no alternative monetary policy, which could come a new team in the national Bank. Because we’re not talking about personalities actually, we were talking about politics. Moreover, all people who work with him in the Office of the President, hold about the same views in monetary policy, and resin. So there is nothing qualitatively new, we do not see”, – says Alexei Kusch.

Oleg Ustenko also says that the issue is not the personalities, and the preservation of economic policy.

“As for the possible new leader, it’s not a question of who is the leader. The question is – will you keep the independence, understanding of macroeconomic fundamentals and the mandate which have the NBU. In my understanding, this is easily solvable problem. Irreplaceable we just do not. And care Smoliy with this post does not mean that we can suddenly experience the problem of monetary stability. Insinuations that suddenly impair monetary stability, suddenly changes course, inflation would spin up to some incredible limits, remind me of the pre-election campaign before the second round, when he used such “horror stories” that supposedly will come Zelensky and the course will be 70, inflation will rise to incredible limits. I don’t see any problem here. We have substantial reserves, they exceed 25 billion dollars, which clearly ensures our exchange rate stability”, – the expert believes.

Note that the resignation of the head of the national Bank was the main topic for discussion in Parliament. For details, see the story “Today”: