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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Struggle for National Bank Begins

20 July, 1999 - 00:00

Will the hryvnia stand it?

By Iryna KLYMENKO, The Day
On July 22, a law came into force, which, if used skillfully, could paralyze
management of the National Bank (NBU). Nevertheless, the NBU works and
even reports an excellent state of the national currency, for which it
was made responsible by the Constitution. However, it is not ruled out
that those fond of "steering" are about to get down to their hobby. For
on May 20, Verkhovna Rada resolved that a totally unpaid Supervisory Board
be the highest governing body of the National Bank.

The NBU Supervisory Board (with half of it to be elected by Verkhovna
Rada before the recess and another two presidentially appointed members
already delegated on July 2 by the eighth congress of the Commercial Banks
Association) will in fact become the sole master of Ukraine's main money
factory. Moreover, Parliament's volunteers to manage the NBU are in no
way worried that the management model featured in the applicable law will
make it impossible to adequately respond to the current situation on the
Ukrainian money market, which is in principle clear, for the bank management
amateurs are not obliged to bear responsibility for inflation or devaluation.

NBU Governor Viktor Yushchenko said at his latest press conference on
July 12 that he was aware of what the legislators were guided by, intentionally
putting off the hearing of a bill on changes to the law On the National
Bank, but he failed to go into detail. "The pattern and ways of [Parliament's]
behavior serve the goals set by certain political forces, which want to
form a central bank management system but do not wish to revise the law,"
Mr. Yushchenko said evasively. However, addressing earlier the congress
of the Commercial Banks Association, Mr. Yushchenko quite bluntly compared
the NBU to a cooperative and gave an assessment of the fact that politicians
and bankers had voiced their personal interests long before, when the current
system of NBU management was still.

The NBU is quite unlikely to avoid becoming involved in the "abnormal
relations" now pervading all state institutions having anything to do with
money and finance. The question is: why should the NBU be in a better position
than, say, the Ministry of Finance? For the latter, throughout all its
history, has never fulfilled a single law on the budget capable of being
implemented. The answer to this question should perhaps be sought somewhere
in the realm of morals, not in the field of national politics and economics.

As to politics and economics (provided the unbending and unsinkable
current chief banker Yushchenko does not resign), there could be several
options, each of which is much better than a full-fledged implementation
of the law On the National Bank. Firstly, Parliament fails to reach a consensus
on the composition of its members on the NBU Supervisory Board. For instance,
the Communists have already hinted that the NBU would not be "privatized"
by other "cooperators," too, without their representative Serhiy Hurenko.
Secondly, the board's fully-fledged operation might be blocked by the President.
On the other hand, he is hardly likely to do this: he already had a chance
to veto the law, but certain interests prevented him from doing so. And,
finally, NBU professionals seem to be getting ready seriously to prove
at the Constitutional Court, with charts and tables in hand, that the "legitimized"
system of NBU management is incompatible with a stable hryvnia.

 

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