Reason for Hard Monetary Policy – Banal Enrichment: Economist Alexei Kush

The price of monetary policy of the NBU is easy to estimate in money.

Because the consequences here are quite material: the NBU pays at least one and a half times more to banks for deposit certificates, and the Ministry of Finance – for T -bills. For example, in 2025, the Ministry of Finance will pay for the maintenance of the production boost (coupon) almost UAH 250 billion (last year about UAH 108 billion). The NBU paid banks for deposit certificates during the war more than UAH 200 billion.

To whom did this money go?

According to government bonds, a large part of state banks, including their inefficient administrative expenses. According to NBU deposits – 60% of income payments went to private banks, including oligarchic and foreign. The total overpayment as a result of an overestimation of the NBU discount rate was up to UAH 400 billion or $ 10 billion during the war.

However, the high discount rate does not fulfill its formal purpose:

1. The rates on population deposits in banks do not increase significantly. Moreover, 65-70% of the population in banks-funds for questions on accounts and cards for a overwhelming interest rate.

2. The outflow of capital from the country is blocked by direct administrative prohibitions, but schemes with fictitious imports are still valid.

3. Inflation is high, galloping, 14-15% in annual dimension.

This proves once again that the reason for the strict monetary policy of the NBU, may not be formal reasons such as the fight against inflation, but banal enrichment during the war of a narrow financial lobby, a kind of “club of friends of the Institute”.

Alexei Kush