23 May 2023 11:50

NBU updates strategy in light of external factors, might revert to inflation targeting, flexible exchange rate

MOSCOW. May 23 (Interfax) - The National Bank of Ukraine (NBU) has updated its institutional strategy taking into account external factors, which will enable it to form alternative action plans for various developments, the NBU said in a press release.

The new strategy, which is indefinite, includes short-term measures aimed at ensuring stability and preventing the deterioration of the situation in the financial system and the economy in general, including the use of tools to control inflation and the hryvnia exchange rate.

It also includes medium-term measures aimed at setting the stage for future reconstruction and growth of the economy, such as reducing bureaucratic barriers, enhancing transparency and competitiveness of the environment and attracting investments.

The strategy has five goals focused on the NBU's primary functions of ensuring price and financial stability. "They are broken down into 24 strategic initiatives, on which the central bank will focus in the coming years," the NBU said.

The first goal is a "sustainable hryvnia." As part of the pursuit of this objective the NBU plans to develop a strategy to return to inflation targeting, currency liberalization, and a flexible exchange rate, and gradually ease and phase out forex restrictions.

The second goal is "financial stability." Achieving this will involve, among other things, "balanced, development-oriented regulation and supervision."

Achieving the third goal of having the financial system "operate to restore the country" will involve stimulating the development of a "responsible financial market," and developing the credit market, insurance services market and capital market infrastructure.

The fourth goal is "modern financial services," which will involve strengthening cybersecurity, as well as further digitalizing financial services, introducing new technologies and promoting cashless payments.

The fifth goal, an "effective central bank," will involve developing international cooperation, European integration of the financial sector and the digital transformation of the NBU.

The NBU's previous strategy was intended to run to 2025.