. 1 i will then turn to the current state of the economy to extract inferences about the effectiveness of our strategy. i will then conclude looking forward. monetary policy responses to the crisis in the euro area, the crisis has evolved through three phases. the first phase was triggered by the abrupt liquidity strains that almost paralysed the global financial system in the immediate aftermaths of the collapse of lehman brothers. banks – both in the euro area and elsewhere – suddenly became very uncertain about the underlying health of other banks and stopped lending to each other. the ecb was very swift in its response, faithful to its responsibility to guarantee appropriate liquidity conditions to solvent banks. together with other major central banks, the ecb stepped in with forceful and coordinated interventions to provide essential liquidity to the banking sector. in the euro area, liquidity was made available in virtually unlimited amounts – against eligible collateral – and at increasingly longer tenors, which helped those banks that were being negated access to market refinancing to remain in business and continue their key intermediation function. without this response, the financial system would have imploded and a far deeper contraction would have occurred. 1 / 6 bis central bankers'speeches the second phase of the crisis came as a consequence of the loss of confidence in some sovereigns. it brought on the development of redenomination risk and thereby threatened the integrity of our currency. the sovereign debt crisis found impulse in some cases from a weak fiscal position, whereas in others from a weak banking system. but irrespective of its initial impulse it quickly became a two - way interaction through the “ bank - sovereign ” nexus. banks remained dependent on fiscal authorities for solvency assistance, and the financial obligations vis - a - vis banks that this responsibility created on the side of some national fiscal authorities with weak fundamentals further undermined their credit standing. as the cost of borrowing for certain governments increased, banks with exposures to this debt came under intense market pressure, ultimately leading to entire national banking systems losing market access. this in turn resulted in financial fragmentation and a serious disruption to the monetary transmission mechanism. the ecb had not remained inactive in the face of such vicious feed - back loop, as it saw the implications that such dynamics could have for price stability. but, as the ecb lowered interest rates, these reductions were not being passed on to firms and households in a large part of the euro area, signalling an unusual disconnect between expanding

relatively low energy prices on the global markets an increase in food supply driven by higher productivity in agriculture. the nbu has also performed scheduled revisions of other macroeconomic forecasts 1 / 3 bis central bankers'speeches the nbu has revised its economic growth forecast upwards, to 3. 5 % in 2019 – 2020 and 4 % in 2021. the revision was driven by the sustained domestic demand, higher productivity in agriculture, and improved consumer sentiment. in the meantime, slower growth in the global economy and worsened terms of trade will weigh on economic growth in 2020. the 2019 – 2021 current account deficit will remain acceptable. in particular, it will narrow to 2. 9 % of gdp this year despite the stronger hryvnia. that will be driven by an improvement in the terms of trade and the rich grain harvest. conversely, the current account deficit will widen slightly in the years to come, as a result of a decrease in gas transit and less favorable global commodity prices. in particular, the nbu expects somewhat lower iron ore prices and higher energy prices. what does the realization of the said macroeconomic forecast depend on? further cooperation with the international monetary fund remains the basic assumption of the macroeconomic forecast. the current nbu forecast assumes a new imf cooperation program will be approved by the end of 2019. this will allow ukraine to attract other official financing, improve the conditions of access to the international capital markets, and support the interest of investors in ukrainian assets. as a result, notwithstanding large external debt repayments, international reserves will range at around usd 23 – 24 billion in the coming years, which is sufficient to cover three months of future imports. the nbu currently sees two key risks to the above macroeconomic forecast, and in particular to inflation decreasing to its target in 2020. the first risk is a delay in signing a new program with the imf. the second risk is about increasing threats to macrofinancial stability, mainly due to ukrainian court rulings. if materialized, these risks could worsen exchange rate and inflation expectations, and make it harder for ukraine to access the international capital markets in order to repay a heavy debt load in the coming years. the following risks also remain important : a complete halt of the transit of russian gas through ukraine intensified trade tensions and more turbulent global financial markets an escalation of the military conflict and new trade restrictions introduced by russia. why, given the said risks, did the nbu cut the key policy rate by 1 pp? although still