The reason for our conversation with the former head of the NBU Council Anatoliy Galchinskim was a sensational scandal the issue of money the National Bank of Ukraine. Ex-Prime Minister Yulia Tymoshenko to sow discord, saying that she issue, "off scale". And the current Prime Minister Mykola Azarov confused even more, saying that in general no emission was not After discussion, Prime Minister's conversation turned to the dispute and many other equally important issues. - Mr. S., you as an authoritative expert on money circulation should be aware of all the secrets of the emission process. Explain to our readers, on whose side the truth. - A well known specialist denezhnika William Gladson (who, incidentally, in the 60-ies of the XIX century was the British prime minister) has become popular expression: even love can not do as much stupid as trying to interpret financial processes. I do not know to what extent this applies to you mentioned persons involved. Let me just say that when I heard the phrase that the NBU is absolutely no issue at all does not exercise, I somehow involuntarily thought: back wages will buy food pans. They would have been ... Issue - it is a permanent process, this issue of money in circulation. Different cash and cashless emissions, the primary issue, carried out by the NBU, and the secondary, realized through the mechanisms of the so-called credit multiplier of the commercial banks. Direct impact on the macroeconomic processes renders the dynamics of money supply, which comprises of the outstanding cash, deposits and other components. Perhaps not all death is to know. Premiere, former and current - are people too. - And yet - "rolls over" our issue or not? - If the answer to your question, which is among the most complex, "are simple folk," then, most likely as a criterion of optimality issue, you can use the inflation rate. Last year, inflation was lower than projected. Draw your own conclusions. Important and another indicator - the level of monetization (the ratio of broad money to GDP). If it is below the optimal size, then a certain lag to increase emissions. Here is an example from my own practice. For 2002, the NBU council approved a ceiling of growth of broad money (this is an exclusive function of the Board) to 35%. But even such impressive growth in money supply was not enough: for the year we have deflation - about 1%. While a very low rate of monetization of GDP (only 28%), and that meant money in the economy were not enough. In the context of the "debate" premiers can call and the following figures: in 2005, while prime minister Yulia Tymoshenko, the money supply increased by 54,3%, which, naturally, could not but influence the inflationary pressures. The level of the most dangerous inflationary - cash issue raised in 2005 by 43%, whereas a year earlier - by 27% in 2003 - only about 8%. Last year, money supply grew by 22,8%. From a formal point of view, this is a very impressive figure. I - a supporter of tighter monetary policy. In addition, the level of monetization of the economy is now close to its optimum - 53,3% (in Poland - 53,3, in Russia - 49,9%). But in this case I would be careful with accusations. NBU is hostage to its own policy as "anchor currency" in which the emission parameters are determined not in the offices of the NBU, and the currency market. Devalued one of the main instruments of monetary policy the central bank. This must speak openly: Last year 99.4% growth in money supply amounted to operations in the foreign exchange market. We're talking about in the balances performance. In this situation, can not but worry and another: NBU limits its ability to perform one of its basic functions - to act a lender of last resort. Emission resources are absorbed by the currency market. Suffers from the banking system, the economy as a whole. Loses its effectiveness a key indicator of monetary policy - NBU discount rate. In the West - is a key instrument of economic regulation. - You refer to official statistics, but she was prone to manipulation. Opponents of the NBU emphasize on this. - But this is what is called a "hang noodles on the ears," this is bullshit. There are dozens of proxy indicators, which enable a specialist to determine the authenticity of the official monetary statistics. Every penny goes to the emission account of the recipient. Issue - it is not printed money, and money poured into the channels of circulation. As a result, there is a double or even triple by the process. So the "chemistry" here is completely eliminated. Add to this tight control by the IMF - and you'll see all the inconsistency of such accusation. - Is it too you are defending National Bank? - I'm not defending the bank official, and the holy of holies - the national currency, which, incidentally, its name reminds us daily that we have a few more than twenty years. Hryvnia - a silver coin of Kievan Rus. I'm really allergic to politicians who, for a moment, forget it. According to Byzantine agreement, 911, the Greeks were obliged to pay tribute to Prince Oleg in UAH. In Europe, very little currency with a similar historical pedigree. Rubel has appeared in the XIV century, as "chopped hryvnia. Rubel - half of the hryvnia. For more Muscovy if not pulled. I can not be respect for politicians who "allow" themselves to "forget" it. Hryvnia outlive them. The ratio of policy to the national monetary unit determines the level of its economic culture. After all, this is - the epicenter of the economy. In addition, very sensitive to the various "interpretations". - Let's go back to the issues of monetary policy. You are not just talking about the vulnerability of the currency policy of the anchor. How do you feel about the idea of ??inflation targeting, which not only actively debated among experts, but also imposed on Ukraine, its foreign donors? - Very important question. I'm not just an active advocate in recent years the policy of inflation targeting, but I think it unopposed. We need to significantly reduce the potential for inflation. Create a solid foundation of investment growth, its innovative development is possible only on this basis. Depends on it and the dynamics of real incomes. 8-10% - this is a very high inflation. I do not head in the clouds. I know how much to do to reduce inflation by two to three percentage points. But we have no other choice. In the near future, we must reach the level of inflation of 5-6%, but in the long term - 3-4%. Achieving this daunting task without the use of inflation targeting, in which the achievement of inflation target becomes the number one priority, not only monetary, but the whole macroeconomic policy, it is impossible. Inflation-targeting mechanisms are used not only in countries in transition, but also the developed economies, particularly in England, Canada, New Zealand, Sweden, Finland, Norway and others are among our closest neighbors - it's the Czech Republic, Hungary and Poland. We have a very solid operating time for solving the corresponding problem. In the same NBU have specialists with expertise in these matters. - Why then do we hesitate to move to such a system? - It is important to understand the following: To ensure a stable price stabilization only instruments of monetary policy NBU impossible. And it is not only in the growth of energy prices. Inflationary potential in our economy is systemic. And is determined, above all, very high level of public consumption, structural imbalances of the economy, a very high proportion of basic industries, high production costs and narrow the parameters of the internal market, repeated violations of proportionality in the growth of labor productivity and remuneration, the monopolization of high and low levels of competition, the actual lack of stock market capitalization of low incomes and many others. In this situation, inflation targeting may be efficient only if the joint system of coordinated actions of NBU and the government. Looking for fundamental changes in the general philosophy of government economic policy: the policy decisions of individual issues must give way to prioritize policy of macroeconomic stabilization. Finish the subway station for the borrowed money - not a case about which one can per week PR. It is also a matter of local rulers - what they take away the bread? Let's start in the first place to address issues that affect the overall economic situation. This - at first. Secondly, we must realize the futility of policies to promote exports through low exchange rate of hryvnia. The most serious problem of the Ukrainian economy is the narrowness of the domestic market. Last year, exports grew several times faster than the general parameters of the GDP. The result - the problem continues to worsen. Our economy will never be attractive for investments in such a situation. Foreign investment is an endless stream of float in China's economy, primarily due to a very fast growing domestic rink. In China's foreign trade turnover amounted in 2007 pre-crisis year, 38.8%, Russia - 30,4%, in Turkey - 21,9%, and we have - more than 60% of GDP. This statistic says it all. - Did not understand the government? - The government has not put people with macroeconomic thinking. A good understanding of the philosophy of "buy-sell" is very important, it is also an art, a gift from God, but to guide the economy as a whole organism is not enough. The sad saga of the adoption of the Tax Code - one of the evidence that generally the potential macroeconomic thinking the government is very scanty. I do not rule out an interest income redistribution due to the low exchange rate of hryvnia in favor of exporters. Generally need to understand the nature of high parameters of Ukrainian exports. Export stage was not preceded by the stage of technological renovation of production. We are now ranked first in the world, the share of obsolete, archaic open-hearth steel production: the world average - 3%, and we have - more than 40%. Export potential of the basic branches of all the years relied on low-cost labor and low (artificially) the value of the currency. Such a situation is hopeless. Looking for decisive steps to correct the fundamental general orientation of economic policy in the country. Apparently, the final word in this I must say the president, of course, if there is an understanding on Bankova marked. Not only strong, but also a promising economic policies - this is a policy that is primarily for the domestic market. It turns out that the crisis of 2008-2009, we learned nothing. With regard to the NBU, then here it is necessary to move more decisively towards the liberalization of the exchange rate. Without this targeting policy is impossible. I usually share the post-socialist countries to countries with formal and real open economy. After joining the WTO Ukraine became a country with a truly open economy. In this situation increases the importance of market regulators balance of payments, and that without mechanisms of floating (with the necessary delimiters) hryvnia exchange rate is unrealistic. To the naked eye can see something else: the domestic prices are rising and the exchange rate of hryvnia artificially maintained at a constant level. What is the end result? It is obvious: the dollar is stable, and the hryvnia depreciating, people refuse the hryvnia, converting it into dollars. And where is the policy of strengthening the national currency, which must implement the NBU, where the policy of de-dollarization of the economy? This - the most obvious contradictions, elementary things. There are questions and more complex order. All this requires a meaningful and coordinated solutions. - You have raised the issue of an undervalued exchange rate of the hryvnia. Is it possible to substantiate this thesis in more detail, because recent data show an increasing negative trade balance? - Payments made on the basis of purchasing power parity, show that in 2009 the exchange rate of hryvnia was understated by 2,6 times. Speaking of which, let's not forget that in times of economic crisis, the greatest losses suffered hryvnia - she lost her weight in more than 70%. I recall that in mid-2008, one dollar was worth 4.6 hryvnia. Now too late to raise the issue was whether the NBU possible due to currency intervention to prevent such a fall. Yes, from an undervalued benefit exporters. But at the same time as a result of the devaluation crisis in 1,7 times went up to UAH equivalent energy imports, machinery and equipment, medicines and other products of critical import, from which we can not refuse. Adequately increased cost of servicing the external debt of state and business entities. The list of such losses can be continued. According to statistics from IMF, Ukraine's GDP in current prices fell in just one year with 179.7 billion dollars in 2008 to 115.7 billion - in 2009. Respectively, from 3,9 to 2,5 thousand dollars decreased GDP per capita. This dynamic is reflected not only a real decline in GDP, but the slump in the hryvnia exchange rate, on the question. Do I need to in these conditions, accumulating foreign exchange reserves to continue the artificial devaluation of the hryvnia? Strengthening the economy should be accompanied by adequate strengthening of the exchange rate trend. I'm not talking about artificial forcing the process. Market itself in a position to solve this problem. He needs only a little help with this or at least not to interfere. It is a very important factor in the anti-inflationary policy. - Last year, the NBU council seems to have never met, and the world from this is not overturned. Do it, NBU council, in principle? Recently, one of the Vice-Premier said that it is generally an attribute of the administrative system. - The administrative system of the central bank is subordinate to the government, and that is where no advice is really not needed. In the UK - a country classic-liberal market economy - for many years the Committee operates monetary policy the Bank of England, which consists of nine people and sells power, similar to the powers of the NBU council. NBU Council - this is our constitutional norm. Officer must be at least this. But I want to talk about something else. According to the Law on the National Bank of Ukraine, on its board charged with the exclusive function of developing a framework for monetary policy, oversee its implementation, and also, very importantly, approval of budget revenues and expenditures plus NBU definition audited financial statements of the National Bank. There are other equally important functions. Their implementation can not iterate over the board NBU. I do not know what is in the process NBU council, but if these issues are dealt with otherwise, then those decisions, according to the laws of jurisprudence, can be judged as illegitimate. - Last question: how do you assess the overall economic performance of the country over the past year? - 4,1% GDP growth - is better than a decline of 15%. But we must take into account the cyclical pattern: after the crisis, even if nothing is done, recovery occurs by itself. In the past, many countries have overcome the results of the crisis of falling. Us this is still very far away. In 2000-2004 the average annual growth rate was 8.6%. Why do the authorities do not aspire to this level? 4% growth - is preservation of our backlog. That is the essence of the problem posed by you. Source: Mirror of the Week
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