Transparency: National Bank of Ukraine

The Ukrainian central bank has made strong progress in improving its transparency during a highly challenging operating environment
The National Bank of Ukraine
The National Bank of Ukraine
Oksana Parafeniuk

Central banks do not always find it easy to become more transparent to the outside world, even when they serve stable economies in orderly, peaceful countries. But the National Bank of Ukraine has dramatically increased its openness even as it had to cope with a host of serious problems.

Ever since a revolution brought down the country’s president in 2014, the NBU had to cope with a multiple problems, including rapidly spiralling inflation, an escalating war in the country’s east and a compromised banking system. It would have been tempting to release no new information, or even reduce the NBU’s transparency.

National Bank of Ukraine governor Yakiv Smolii
Photo: National Bank of Ukraine
Yakiv Smolii, NBU

But under the leadership of governor Valeria Gontareva (2014 to 2017) and her successor, Yakiv Smolii (from May 2018 onwards), the NBU took the opposite path. It considerably increased the amount of information it released on how it did its job. The NBU worked hard at making this information available in a clear, timely manner to those who needed it.

Many of the changes the NBU made have been appreciated by international analysts (who are invited to join quarterly conference calls) and journalists covering the Ukrainian economy. The central bank answers queries accurately and regularly publishes data on Ukraine’s key economic indicators.

The central bank did not hide the extent of the problems it found in the country’s banking system. Instead, it gave clear information on the issues it found in many undercapitalised or fraudulently run banks. This has put it well beyond the standards of some central banks in neighbouring countries, including some Eurosystem central banks.

Fighting ‘fake news’

As Ukraine continued to fight against Russian-backed separatists and its politics became increasingly polarised, the NBU became the target of some vicious propaganda. Its support of the International Monetary Fund agenda of economic reform and liberalisation made it some powerful enemies in the media and political elites. This hostility was reinforced by the NBU’s reform of Ukraine’s banking sector, where it closed approximately 90 banks – many of which had powerful, politically connected owners.

The NBU reached out to Ukrainians using a variety of social media platforms, including Facebook, Twitter, YouTube and Instagram. It aimed to use plain language and as much visual content as possible

Countries across the world have seen how potent propaganda campaigns can be. Much of the Ukrainian population was suffering considerable economic dislocation during this period. If a majority of Ukraine’s citizens had begun scapegoating the central bank, as some influential people might have wished, the country would have faced serious problems.

To maintain trust with the population it serves, the NBU had to mount a proactive campaign. Local journalists are offered quarterly off-the-record meetings with board members, monetary policy announcements are offered under embargo for news agencies, and online chats are made available for questions during press briefings. The NBU also reached out to Ukrainians using a variety of social media platforms, including Facebook, Twitter, YouTube and Instagram. It aimed to use plain language and as much visual content as possible. The central bank made all its media events directly accessible to the public on its website and via YouTube.

Monetary policy

One field that has seen major alterations has been the NBU’s monetary policy framework.

The NBU adopted an inflation-targeting regime, announcing goals for inflation in the three coming years. That, in turn, meant that its monetary policy committee had to issue regular bulletins on how it saw inflation developing and how it was reacting. The bulletins have been honest and clear – both when Ukraine’s inflation was falling to reach the targets the NBU had set, and then when it began rising well above target levels.

Valeria Gontareva
Valeria Gontareva, former NBU governor
National Bank of Ukraine/Flickr

In March 2018, the NBU published its comprehensive strategy, setting out its seven key goals for the medium term. The first two goals were to achieve “low and steady inflation” and to bring stability. The central bank also set itself the tasks of bringing transparency and efficiency to the banking system, restoring Ukraine’s lending levels, achieving financial inclusion, efficiently regulating the wider financial sector and bringing about the free flow of capital. All of this needed to be supervised, the NBU said, by a “modern, open, independent and effective central bank”.

At first glance, these goals may seem unexceptionable: they are not ones that could be objected to by most central bankers in developed economies. But actually putting them into practice in Ukraine meant – and still means – taking on some formidable opposition.

The NBU was trying to achieve them in a context where it faced ever-harsher criticism from some Ukrainians, with senior NBU officials even receiving death threats from those unhappy with the cleaning-up of the banking sector.

No luxury

Should the NBU safeguard its newly gained credibility on operational matters – above all, in monetary policy – its effectiveness will be increased. And the NBU will find it hard to carry on reforming and supervising Ukraine’s financial sector without support from politicians, citizens and the media.

By persisting with its efforts, the NBU has shown that increased transparency is not just something that benefits comfortably independent central banks in the world’s most prosperous jurisdictions. Transparency can also be a vital tool for central banks seeking to reform economies hit by crisis.

The Central Banking Awards were written by Christopher Jeffery, Daniel Hinge, Dan Hardie, Rachael King, Victor Mendez-Barreira, Joel Clark, William Towning and Tristan Carlyle

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact or view our subscription options here:

You are currently unable to copy this content. Please contact to find out more.

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account