Softer monetary policy: government bankers in Kiev's Central Bank chief

The Ukrainian President Selenskyj has appointed a critic of hard monetary policy and the proponents of interest-rate cuts as the new Central Bank Governor. The Parliament has approved the appointment Kyrylo Shevchenko on Thursday. His predecessor had resigned in Protest against growing political pressure back, what had the admonitions of the International monetary Fund.

Andreas Mihm

Economics correspondent in Vienna.

Shevchenko will be the new Governor of the Ukrainian Central Bank. President Wolodymir Selenskyj nominated the Chairman of the state Ukrgasbank on Wednesday evening. The Parliament in Kiev, in the Selenskyj is no longer a majority, must agree to the appointment yet. The replacement had become necessary because of the initial 2018 to office obsolete note the Bank's President, Yakov Smolij on 1. July, unexpectedly resigned. Smolij has had cuts with growing pressure from the President to the interest rate on the guaranteed independence of the Central Bank justified.

several times, most recently this week, had urged the International monetary Fund, on the independence of the Bank. This is a prerequisite for the continuation of the $ 5 billion large aid program, with the funds of the Budget of Ukraine is based, once again, had the IMF Director Kristalina Georgieva declared these days in a telephone conversation with Selenskyj, after she had praised the policy of the Central Bank from the last few years expressly. "I called on President Selenskyj to keep the price of a sound monetary and financial policies – these are the key to greater investment and inclusive growth."

voice of the Governor may decide is in stalemate

Selenskyj had assured the independence of the Central Bank, also publicly. In consequence of Smoljis resignation and its impact on the financial market in a planned bond issue for 1.75 billion euros had been suspended. Shevchenko had already been at the beginning of July in Kiev as a possible successor Smolijs traded. In the past, he had, like the President, for interest-rate cuts made and the strengthening of the national currency, the hryvnia-oriented Central Bank policy is criticised. With lower interest rates, the demand for credit is intended to stimulate and boost the economy.

Whether its for maybe this Thursday expected appeal will lead to a change in Central Bank policy, is uncertain. The Parliament, the Rada, is the end of the week in the summer break. In the six-member Board of Directors, the vote of the Governor is only the rash, when it comes to a voting stalemate.

Therefore, the first Meeting of the governing Board under Shevchenko's line on the 23 will. July be observed by the markets, according to the analysts of Raiffeisen Bank International in Vienna. However, connoisseurs of the scene in Kiev to the fact that in these days, there is a further point in the Board of Directors will be free, so that Selenskyj could soon propose a Trusted for the leadership of the Central Bank.