Ukraine Raids Foreign Currency Deposits

Amid the allegations of an armed invasion by Russia in Crimea, Ukraine's Central Bank has announced that it will return foreign currency deposits in Ukrainian Hryvnias unless the withdrawal requested is UAH 15,000 (approx £800) or less per day; ie Ukraine has raided the foreign currency deposits.

Needless to say the Hryvnia, until that announcement, was collapsing.

Stepan Kubiv, the newly appointed Governor of the National Bank of Ukraine, made the following statement yesterday:

"I have just been appointed as Governor of the National Bank of Ukraine.

The National Bank of Ukraine has professional staff.

The vitally important systems, including the SEP, NSMEP, and operations in the open market, are operating as usual.

We are in control of the situation in the banking sector and maintain two-way communication with all the banks, regardless of their size.

We have analyzed the composition of the gold and foreign exchange reserves of the National Bank of Ukraine, which comprise highly liquid assets.

I feel confident that the situation is under control and manageable.

In my view, the most important tasks facing the banking system are protection of depositors' interests, the resumption of talks with all foreign creditors, primarily, with the IMF, once the new Ukrainian government is formed; development and approval of an ambitious and clear plan designed to reform the economy and the financial sector.

With this in mind, the National Bank of Ukraine shall take the following urgent steps.

The central bank stands ready to provide liquidity, including cash, to banks in the amount required, while ensuring that loans come with tougher conditions on transparency and control over their utilization.

The National Bank of Ukraine is set to take a tough line on those banks that violate the required reserve ratio and arrant speculators in the foreign exchange market. I feel confident that the measures taken by the National Bank of Ukraine will calm the markets and reduce devaluation expectations.

In my view, the resumption of talks with foreign creditors and restoration of investors' confidence in our country are crucial.

With financial assistance provided by foreign creditors, Ukraine will build up a substantial financial buffer that will help stabilize the situation in the financial sector and the entire economy.

The National Bank of Ukraine is ready to actively participate in the development of the reform plan and play a key role in its implementation. This plan based on the principle of transparency should become the key and top priority task of the Parliament, the Government and the National Bank of Ukraine. The above-mentioned measures are bound to translate into key drivers for economic growth.

I feel confident that this plan will receive support from the wise Ukrainian people."

Good luck to him!