Many years of fixed exchange rate together with expansionary fiscal policy created huge external imbalances.
The report describes the following key issues of Ukrainian banking and finance:
- Inflation targeting instead of defending the currency peg
- ‘Moral hazard’ aftermath – fewer banks of better quality
- Strengthening of the supervision
- State-owned banks ruled by the market
- New currency law paves the way to future FX liberalization
The report was presented in Vienna during the panel discussion “Ukraine’s Economic Development and the EU Association Agreement”.
This report was produced under the Ukrainian Think Tank Development Initiative (TTDI), which is implemented by the International Renaissance Foundation (IRF) in partnership with the Open Society Initiative for Europe (OSIFE). TTDI is funded by the Embassy of Sweden in Ukraine. The views and interpretations expressed in this report are the authors’ and do not necessarily reflect those of the Government of Sweden, IRF and OSIFE.