One of National Bank’s major functions is to ensure stability of Ukraine’s national currency for the sake of price stability, inflation control and solvency. According to the National Bank of Ukraine, this is the only instrument stimulating economic growth. Collapse of Ukraine’s national currency back in 2014 demonstrated the Bank’s inefficiency to keep the national currency stable. Unwillingness to cooperate with the government and to resort to other initiatives to restore the real sector has caused further slide into the crisis, higher inflation and as a result – complete inability to use traditional mechanisms to influence the economy exclusively through regulation of money supply. Another function of Ukraine’s National Bank is supervision over the banking system, which is currently experiencing a profound transformation – 180 banks, operating at the beginning of 2014, have been reduced to 100. Although, it’s an unprecedented process, further liquidation and consolidation of banks is inevitable. The prospect of 50 banks remaining by the end of 2017 seems completely plausible.
How to turn the National Bank of Ukraine into an efficient mechanism of economic development from a dogmatic adherent of monetarism?