The extraordinary events as an environment for the development and implementation of the monetary policy of the National Bank of Ukraine

Abstract

The paper establishes that the extraordinary events represented by the pandemic and martial law over the past five years have become powerful catalysts for changes in the banking business. It is shown that maintaining the financial stability and defense capability of the country in the conditions of martial law are the main tasks of the NBU. It was established that due to the consistent and predictable position of the NBU, balanced monetary and regulatory policy, it was possible to ensure the stability of the financial system of Ukraine even in the difficult conditions of martial law. It has been proven that the introduction of restrictive measures is a necessary step to ensure the stability and security of the financial system of Ukraine in conditions of extraordinary events. It is shown that the banking system of Ukraine demonstrates the ability to function effectively, even in the extraordinary conditions of war, thanks to a high level of liquidity, sufficient capital and the ability to generate income. The main stages of monitoring the Monetary Policy Strategy of the NBU are proposed. It is shown that its main principles in the conditions of martial law are: preservation of the stability of the financial system and liquidity of banks; development and implementation of a monetary strategy that takes into account the peculiarities of the martial law; financial support to banks and the economy; restrictions and control on the foreign exchange market; readiness to take emergency measures; effective communication with the public and business community. Recommendations for improving the monetary policy have been developed, aimed at increasing its efficiency and flexibility, ensuring the stability of the financial system and supporting the economy in the conditions of martial law. It has been proven that a set of measures for analyzing and evaluating the effectiveness of monetary instruments, implementing changes to improve efficiency, revising target inflation indicators, analyzing the situation on the foreign exchange market, strengthening the communication strategy, conducting stress tests, coordinating with other branches of government, creating reserves and flexible mechanisms will make it possible to minimize the negative consequences of martial law and contribute to the faster recovery of Ukraine’s economy.