yakiv smolii : strategy of ukrainian financial sector development until 2025 speech by mr yakiv smolii, governor of the national bank of ukraine, at the opening of the meeting of the national bank of ukraine with stakeholders, kyiv, 16 january 2020. * * * dear mr prime minister, dear guests, i am pleased to open the third annual meeting of the national bank of ukraine with clients and partners. these events are how we make the nbu more transparent and accountable to the public, and its policy more comprehensible. stakeholder meetings enable a comparison between what was planned and what has actually been achieved. however, today ’ s event goes beyond summarizing the central bank ’ s performance and unveiling plans for 2020. the highlight of our meeting today is the strategy of ukrainian financial sector development until 2025. in less than half an hour, the minister of finance and the heads of the national securities and stock market commission, the national financial services commission, and the deposit guarantee fund will join me in signing this milestone document. my colleagues and i have worked on the strategy for almost six months. we have spent hundreds of hours studying the experience of other countries, negotiating with regulators, planning, and consulting with financial sector participants. and to be honest, we are satisfied with what we have accomplished, because we did it in the spirit of maximum cooperation and transparency. we believe that this is the only way to keep our plans realistic and to make them materialize. we are convinced that this is the only way to take the strategy beyond being words on paper and to make it into a full - blown vision of the future. by signing the strategy, my fellow signatories and i commit to making this vision a reality. we possess the necessary and, most important, successful experience to make it happen. the past five years have been marked by the comprehensive program of ukrainian financial sector development until 2020. for ukraine, that document was the first of its kind. like the new strategy, it was the fruit of joint efforts by financial regulators, resulting in many bold decisions being made in that period. but let me be specific. to evaluate the results of that effort, we tracked how the actions outlined in the comprehensive program were being performed. we found that almost two thirds of those actions had been taken. not all of them were brought to their conclusion, of course. some of them were planned to last beyond 2020 and are still being realized. some of those

sarb. rather, they are focused on the contribution that particular individuals can make to the monetary policy decision - making process. but within these constraints, we also have to be mindful of the gender composition of the mpc, which is currently all male. this explains the absence of a full complement as provided for in the terms of reference, and it is something that we are working hard at to rectify. every monetary policy decision is an outcome of in - depth discussion and debate. even a'no change'decision is a policy decision. i should also note that the monetary policy decision is not a one - off event ; it is a continuous process which culminates in the mpc meeting where decisions are finally taken. we are constantly talking to each other, discussing what we see and how we interpret what we see. these discussions are not only amongst mpc members, but also with other staff members in the sarb who keep us updated about developments. we also interact with analysts outside the sarb, and we hear what they are thinking as well. a few days before each meeting we receive further documentation prepared by various units in the sarb, so by the time we have the mpc meeting, we are well prepared! mpc meetings last three days. the first day of the mpc meeting is devoted to discussions about global and domestic economic and financial market developments. this part of the meeting is attended by the mpc as well as about 55 other staff members. each presentation is followed by a discussion, where we interrogate the presenters and their colleagues. all attendees are invited to contribute to this discussion. at this point, however, there is no discussion of the policy stance. the following morning is devoted to a discussion of the forecast. these deliberations are attended by some members of the modelling team as well as about eight other senior officials, apart from the mpc members. the outputs of two of the main models are presented and discussed. page 6 of 10 given the centrality of the forecast, it is important to say something about the role of the forecast in the monetary policy decision - making process. monetary policy acts with a lag. according to our models, the full impact of a change in interest rates could take between 12 and 18 months to fully work its way through the economy to impact on gdp1 and inflation. for this reason, monetary policy decisions need to be based on the expected path of inflation and not on current inflation, which is a function