Introduction to Crisis Response
The National Bank of Ukraine (NBU) has been a source of knowledge for the UK, particularly in terms of crisis response measures. This was evident when Bank of England Governor Andrew Bailey spoke at a conference in Kyiv, praising the NBU’s anti-crisis response to the economic shock caused by Russia’s full-scale invasion in 2022.
economic shock
Ukraine’s GDP declined by 28% at that time, with millions of displaced persons and damage to Ukraine’s economy threatening national currency stability. However, the country’s banking system did not stop for a day during the hostility and uncertainty that swept through the country three years ago. Bailey noted that the NBU’s experience has been extreme in many respects, requiring the adaptation of a combination of interest rates and exchange rates, policy instruments, foreign currency restrictions, and other tools as necessary.
Adaptation and Resilience
Bailey said, "We at the Bank of England have learned in our contingency planning from what you do when it comes to serious disruptions to payment systems and to everyday banking business. ‘Cause you do it for real." The NBU’s ability to adapt and respond to the crisis has been impressive, and the Bank of England has taken note of its strategies. The NBU has been clear in its intention to return to conventional inflation targeting once the security risks abate and appropriate macroeconomic conditions are in place.
International Support
Bailey reaffirmed the UK’s support for Ukraine in its defense efforts during his visit. He was not alone in showing his support, as President of the European Central Bank (ECB) Christine Lagarde also delivered a speech at the same conference. Despite a devastating Russian attack on Ukraine’s capital on June 17, Lagarde made a surprise visit to Kyiv, demonstrating the international community’s commitment to Ukraine’s cause.
Showing Respect
Both Bailey and Lagarde laid flowers at a memorial honoring soldiers killed during more than 10 years of Russia’s war against Ukraine. NBU governor Andriy Pyshny accompanied Bailey at the memorial, highlighting the importance of international solidarity in the face of adversity. President Volodymyr Zelensky reported that Russia launched 440 drones and 32 missiles in total, targeting cities across the country, underscoring the ongoing challenges faced by Ukraine.
Conclusion
In conclusion, the National Bank of Ukraine’s crisis response measures have been a valuable source of knowledge for the UK and other countries. The NBU’s ability to adapt and respond to extreme economic shocks has been impressive, and its commitment to returning to conventional inflation targeting is a testament to its dedication to economic stability. The international community’s support for Ukraine, demonstrated by the visits of Bailey and Lagarde, is a reminder that the country is not alone in its struggle against Russian aggression. As Ukraine continues to face challenges, the lessons learned from its crisis response will be invaluable in shaping the country’s economic future.
