GFF Podcast

Maintaining financial stability: Ukraine's debt management and central bank operations

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In our series four finale, we have a feature-length show with senior Ukrainian finance leaders Yuriy Butsa (Commissioner for Public Debt Management) and Yuriy Heletiy (Deputy Governor, National Bank of Ukraine). We discuss Ukraine's extraordinary financial system resilience in the face of a military invasion, its economic performance and strong monetary controls, and consider the costs and opportunities of postwar reconstruction. Join our regular hosts, Andrew Keith Walker and Christian Rossler, for 45 minutes of lively chat and insight into one of the most remarkable economic success stories of the century.

Speaker 1:

Welcome back to the GFF podcast. Yes, it's March and that can only mean one thing it's the season finale of Series 4 of the GFF podcast. Yes, we're going to be taking a little spring break and then we're going to be back in a couple of months with a whole new show, but before we go, we have saved the best till last. We have a very special show for you today, with senior members of the Ukrainian financial establishment joining us to talk about wartime finance, about economic stability in the face of unimaginable crises and also a positive look hopefully, hopefully towards a developing peace process and the reconstruction of a important member of our european family. Joining me for this very special show is, of course, the man without whom there is no gff podcast. He is the, the BFF of GFF, mr Christian Rossler.

Speaker 2:

Hello, andrew, very happy to be back.

Speaker 1:

Well, it's great to have you back, Christian. It's great to be back here in the virtual studio, sadly for the last time in season four, but we'll be back in season five. But before we do that, we've got this great show ahead. Why don't you tell us a bit more about our special guest today?

Speaker 2:

So, yes, to discuss the state of the capital market of Ukraine. I think we've been joined in this last episode of the season four by two exceptional gentlemen, I think, two gentlemen that have been awarded also titles, I think, most impressive CE funding official by Global Capital Bond Awards in 2022 for Yuri Butsa, who is obviously the government commissioner for public debt management in Ukraine, and, of course, yuri Haleti, who is been key and has been supporting Ukraine's monetary policy, controlling inflation, increasing the international reserves. So a real top notch agenda with real top notch invitees.

Speaker 1:

And let's give a big GFF podcast virtual studio. Welcome to an award winner, an economist, someone who, since the war began, has been the government commissioner for public debt management and previously to that was the deputy finance minister of Ukraine, yuri Butsa Yuri, welcome to the show.

Speaker 3:

Thank you, andrew. It's a pleasure to be here, and we try to make your job of learning Ukrainian names easier, as you see. So we both Yuri's here.

Speaker 1:

Thank you, yes, thank you for that. I do appreciate it. And joining Yuri Butsa, we have Yuri Hleti, who is the deputy governor of the National Bank of Ukraine, again as someone who has been recognized internationally for his incredible work in stabilizing and managing the Ukrainian economy through the outbreak of war and to the present day, and, of course, also was deputy finance minister uh yuri haleti for the show as well, and just for our listeners at home, because both of our guests are called yuri, I will be using their surnames as well.

Speaker 1:

Uh, this is not, uh, some sort of overly formal return to victorian values. As of course you know, we seem to be going backwards in Brexit Britain. No, this is purely to keep it nice and clear for people listening to the podcast. And, yuri Butser, I want to start with you. Can you sort of set the scene for us?

Speaker 1:

I mean, we all know that it's a difficult enough job managing large quantities of cash and debt in an era of excess liquidity. The sort of post-COVID transition away from quantitative easing has been throwing curveballs to finance ministries and debt management offices all over the EU and the world, in fact. So the job is hard enough. And then, of course, there is a crisis of epic proportions. We're just past three years since the invasion of Ukraine by Russian forces, something that would be a catastrophe for many countries and has plunged Ukraine into a very effective but obviously challenging defence of your territory. I mean, tell us what changes on the day that the first shot is fired? Is your focus outward, towards building stronger links with external funding mechanisms, or is your focus inward external funding mechanisms or is your focus inward, looking more at uh internal infrastructure and the, the sort of the gears and wheels of normal financial functioning?

Speaker 3:

uh, thanks, andrew. So it's a very good question, I would say, because normally, you know, we all are financial professionals. We come to the government to help the government and we know our job reasonably well. Hopefully, and like before the war started, what we tried to do is what textbook says right to go lower with deficit, to have a prudent monetary policy, borrow less longer, cheaper and sure, ensure that everything is fine financed and having a strong relationship with international markets and also with international financial institutions. So that was relatively easy. It's hard to do those type of things in emerging market economies, but at least we know what to do.

Speaker 3:

So when the war started, you are in complete unknown because you don't have modern professors or teachers in your universities who remember Second World War and that was the last time when the conflict of that scale happened and the economic impact of that scale was on one particular country. So with that, obviously, what we had to do is had to think creatively to some extent, but really very fast what our priorities are, and that thinking had to happen. When you have air raid sirens, some planes in the sky and you don't know, you constantly read the news to see where Russia advanced and what's happening. To put it as a stressful environment is an understatement, probably. So our decision was it might sound simple, but it was not that when to make it, to make sure that everything works as usual, to make sure that there are no panic in the system. And by ensuring there are no panic in the system, we had to make all the budgetary payments still being made on time and without any delays. So what I mean by that? That all the pensioners have to get their pensions, all the teachers have to get their salaries, so nobody runs to exchange the local currency to FX, to withdraw all the money from ATMs. Don't prevent the band runs.

Speaker 3:

And basically that means that we need to find the funding for the budget to make sure that all the expenditures happen. On top of that, what happened with your public finance? And now currently there is a big debate on how much the defense expenditure has to be 2%, 3%, 5%. So in times when the war starts in your country, it's not about this magnitude of numbers. So you need to spend pretty much whatever you have for defense because you protect your country. So we're talking about 20% plus categories, which obviously widens the budgetary gap. So you have current expenditures you need to finance. You can cut somewhere, so you don't necessarily want to. You know, support theaters to that extent, or build the roads when you have war in your country, but you need to provide the basic services to the population. On top of that, you have all the new military expenditures, especially the new military personnel with their salaries, but also buying all the equipment, and in parallel, because you have a war, you lose significant amount of revenues. A war, you lose significant amount of revenues.

Speaker 3:

So our first task was to calculate what does it add up to in terms of the financing gap and in that situation, your long-term planning becomes a month and short term is like 24 hours rather than conventional couple of years, you know. So with that, we spend some time to see how the system performs. We identified the monthly gap of funding that time in 2022 was roughly $5 billion. Obviously, in parallel, you lose access to all the international commercial markets and if you look at our bond price, those times like went down from I don't know our yield was. I don't remember already, but like, let's say, it was something like eight, nine percent and it went to some like triple digits overnight. So obviously we didn't have any way to borrow, as we used to do before, from the commercial markets. What we had so was domestic market which still was functioning and I probably discussed later how, what we did with the local markets. But also we had our international partners.

Speaker 3:

So what we tried to do is to get everything possible from the international partners to finance at least first couple of months. I remember that at that time we were thinking we survived for three months and thought that after three months it would be something more stable. We are more than three years at war now, so our long-term planning obviously changed now significantly. But at that time we tried to maximize the donor support. We took money from IMF, from the World Bank, everything which was pre-agreed for the peaceful times. We just withdrew over one month and then started to work with all the international partners how to get funding for the more long term. So that was pretty much initial reaction and initial response. We became more sophisticated with the time. But, as I said, you don't know where you're going to as a policymaker. So we had to do a lot of decisions based not on the knowledge but on the mostly intuition, and intuition probably is the right word.

Speaker 1:

And Yuri Butser, I have a question for you about what it's like to operate under these circumstances.

Speaker 1:

Harold Wilson, the British prime minister, famously said that a week is a long time in politics and that's in peacetime. And we can see the sort of intense media scrutiny and sort of pressure and criticism that falls on government ministers finance ministers in particular, it seems and central banks, debt management offices, the civil service. These are, you know, institutions who are under a sort of 24 hour spotlight, global media scrutiny. And, of course, this is the first time a wartime ministry like the Ministry of Finance has been under the sort of pressure of a modern global communications industry whilst trying to conduct wartime operations. So tell us, I mean, you know, have you had to change the way that you approach the sort of communications and the media side of things, or do you just simply not have time for that things? Or do you just simply not have time for that? Do you need to just focus in on policy and you know, um uh, sort of maintain a sort of a stiff upper lip in in the face of the sort of 24-hour rolling news scrutiny that you're under?

Speaker 3:

uh, look when, when this type of shock happens, it did not necessarily have time to see what media wants or media rights. So yes, you need to get your communication strategy right at some point, but initially you need to get your policy response right first. Obviously we had a lot of coverage on the media when I did the first bond auction when the war started. The Russia invaded Ukraine on Thursday. We normally have a bond auction every Tuesday, so over the weekend we spent a lot of time to see whether we make it that auction, whether the systems work where our primary dealers are, whether they have connection, what's happening in general, whether they move to the safe locations. We had to move our stuff to safe locations when we sorted out next Tuesday.

Speaker 3:

We had a bond auction without actually proper secondary market functioning, but we did the bond auction. We rebranded our bonds to the war bonds and I don't remember the amount we raised already, but it was a very significant one. And that particular auction was almost live broadcasted on Bloomberg. You know we had like story on CNN everywhere. It was the most probably broadcasted bond auction of any sovereign in modern history. So it's fair to say that there was a lot of media attention. But we didn't I wouldn't say we concentrated on the media response. We concentrated on making our country safe, you know, and finance and doing our job. So the media was actually derivative from that and we got a lot of good comments how we managed that time and it was joint work between us generally, the government and the central bank. But I think we never, we never targeted media in our thinking what we were doing those times.

Speaker 2:

For sure, so, yuri Heleti, I mean you have been recognized for your significant contribution to Ukraine's financial stability and development over the last two years and your efforts have been really vital in maintaining financial stability and supporting Ukraine's economy during challenging times. We'll talk about it, but as a central banker and from a central bank's perspective, I would like to ask you if you have a different set of priorities as a public institution and lender of last resort within the domestic economy, and how do you maintain the confidence of markets and also the electorate in your abilities to mitigate, let's say, control, inflation and also control quantitative easing in wartime?

Speaker 4:

Thank you. Firstly, it's important to note that the mandate and therefore the key priorities of the National Bank of Ukraine remained unchanged. It's, first of all, to ensure price and financial stability and, in response to this challenging environment, we have adopted our tools and our approaches to effectively fulfill this mandate. Approaches to effectively fulfill this mandate. A striking example is the evolution of monetary policy In the early months of the full-scale war. The National Bank fixed the exchange rate, we imposed very strict currency controls and deliberately abandoned inflation targeting, and these measures helped the National Bank to maintain control over the financial system and to stabilize the situation and, first of all, help us to calm public panic. National Bank quickly realized that anti-crisis measures were not a long-term effective solution. So, as soon as the right preconditions were in place, we began to move back towards a more balanced and predictable policy. At the same time, it's crucial, important to emphasize that the ways in which we fulfill our mandate have expanded. For example, one of this is supporting our defense sector, our defense capability. Ultimately, there would be no price stability to talk about if we were to lose the country itself. On the other hand, the foundation of strengthening Ukraine's defense capability during full-scale war is ensuring macrofinancial stability, which directly depends on maintaining trust in the central bank, and this is why the National Bank of Ukraine committed to its goals. Maintaining the independence of the central bank and preserving the discretion in decision-making was crucial, especially during wartime. This is a crucial precondition for maintaining trust in the national bank among economic agents and market participants. And, what is important to emphasize, we are constantly working to improve our cooperation with the government in order to achieve mutually beneficial effects. Such interaction is conducted with respect for the mandates of each institution In the EU.

Speaker 4:

In this new, challenging reality, the interaction between fiscal and monetary policies is particularly important. Monetary policy is particularly important, and the traditional consensus between monetary and fiscal policy needs to be resourced in order to find the balanced, optimum mix to achieve monetary financial stability. Where possible, we provide support to the Ukrainian government. Very good examples are the following. First of all, it's monetary financing of the budget in 2022. For instance, in 2022, the National Bank made difficult but deliberate decisions regarding short-term monetary financing of the budget to cover defense military expenditures. However, the national bank made the decision on this financing, which was limited and completely stopped.

Speaker 4:

As the start of 2023 as well, we developed comprehensive set of measures to support the domestic government bond market and government borrowing throughout 2023 and last year. However, it's as well important to emphasize, in case we see some threats, risks to macrofinancial stability. We take firm position and I must say that, despite the complexity of the situation, the government has always treated the national bank's position with understanding. Subsequently, we implemented a comprehensive set of measures to mitigate the consequences of the budget monetization and other negative effects of the war, and those decisions included raising the key policy rate in June 2022 from 10 to 25 percent in one month, repegging the exchange rate in July of 22,. As well as calibrated the fixed restrictions to limit unproductive capital outflows. We introduced new tools to protect public savings and we took a whole set of measures to reinforce the monetary transmission. So, making conclusion it's understandable that trust is built on results and National Bank, I believe, demonstrated this.

Speaker 4:

We quickly realized forever that anti-crisis measures fell short of being a sustainable long-term solution. So, as soon as the right preconditions were in place, we began to move back towards a more balanced policy. In 2023, we managed to significantly slow down inflation from 27% to 5%. We have successfully transitioned to a regime of so-called managed exchange rate. Flexibility and macrofinancial resilience allowed us to ease fixed restrictions and the interest rate policy. The average annual policy rate decreased from 22.4% in 2023 to 13.7% in 2024, which gave a significant boost to lending development a significant boost to lending development With the expected acceleration of inflation. We halted the cycle of policy rate cuts in mid-2024 and took measures to stabilize the foreign exchange market and from December 2024, we began and in January and in February of this year continued a cycle of tight monetary policy.

Speaker 4:

We do everything to maintain trust of this year continued cycle of tight monetary policy. We are doing everything to maintain trust and if persistent signs of strong inflationary pressures emerge along with risk of unanchored inflation expectations, will continue to tighten monetary policy in the coming months. In our view, consistent monetary policy combined with active communication measures to stabilize the foreign exchange market will contribute to returning inflation to a sustainable downward trajectory towards a target of 5%. It's important to mention that the fixed market situation remains sustainable and controlled, especially in the war context, and our effective cooperation with government, with Ministry of Finance, is a crucial precondition to ensure macroeconomic and financial stability and to lay the groundwork for a sustainable economic recovery.

Speaker 1:

Now, obviously there's been a huge amount of disruption over the last two weeks, since President Trump met President Zelensky and there's been the initiation of these ceasefire talks. Has that had an effect on your operations? Is it business as usual until something more substantive changes, or have you had to take on some special outlook, as you're going through a period of disruption right now?

Speaker 3:

Look. So we are living in uncertainty mode for three years already, if not more. So our job here to be ready for any uncertainties, right, and I think that from the purely from the public finance standpoint here I don't want to go into any political debate in any way, but purely from public finance standpoint so what we had to do even before any of this year's developments, we had to be sure that we have 2025 fully financed, and I think we achieved that already last year, ensuring that we have all necessary funding in place for the full year. We have all necessary funding in place for the full year within the current budget. So that's our job now, you know, and that's our job normally to make sure that the budget is financed.

Speaker 3:

Yes, the risks to the budget, probably in Ukraine, are different from those in our neighboring countries, and the job is a bit more creative, but at that point, we don't see any immediate impact of any uncertainties over the public finance developments. What we don't know, though, is how any direction of travel with the war situation or security situation will affect the macro forecast for the upcoming years, because, even if you look at the current IMF program, it has two scenarios. The upcoming years Because even if you look at the current IMF program, it has two scenarios and people. One can say that in case of any long-term lasting ceasefire, let's say there can be third scenario it should be more optimistic than we planned. So we have a full range of economic scenarios, from more negative to more positive than the baseline now and we need to assess how that will impact all the metrics.

Speaker 3:

We are watching, you know, revenue collection, gdp growth, inflation, because all of those things impact the budget performance and especially when we talk about 26 and next years, we need to take into account and we need to take into account uncertainty, which is not an easy task, you know. In any way, you have to live through this. For last three years, as I said, record the war is uncertainty on its own, one of the biggest. It's a perfect storm pretty much for the economic system, uh, but any, any changes from the status quo now obviously will have to be reflected in the numbers and will drive our decision making further and yuri heletieti.

Speaker 1:

How does it land on your desk the uncertainty, the disruption we're going through right now? How is it changing your operations? Or is it again remaining in the same flexible, agile sort of response mode that Yuri Butser just sort of outlined for us?

Speaker 4:

Let me start with operational continuity. It's important for us that all systems and protocols for interrupted operation are effective and we we try to improve on a continuous basis to adopt new challenges. I cannot go into detail for security reasons, but let me provide an example. On 1st January of this year, when Russia brought the main building of the national bank, causing a fire which was quickly like solved, all systems continue to operate without interruption. As you know, russian forces actively target our energy infrastructure and to ensure that banks and the national bank can operate even during this prolonged power disruption, we developed the power banking project. This is a joint network of bank branches to cover all of Ukraine. This network operates and provides banking services. This network operates and provides banking services to clients even in critical situations like blackouts. The branches making up the joint network have, first of all, alternative energy sources, backup communication channels, enhanced cash collection capabilities and additional stuff, hence the cash collection capabilities and traditional stuff. Currently in this network we have 2,400 branches in almost 400 cities and towns across all regions of Ukraine.

Speaker 4:

What is as well important to mention over these three years of full-scale war, we have often had to develop new tools, new instruments to achieve our goals, for example, to support the attractiveness of the national currency, ukrainian Rivian.

Speaker 4:

To reduce pressure on the fixed market and the international resource, we introduced a new instrument three months certificate of deposit.

Speaker 4:

This is liquidity absorption tool with three months maturity, is accessible to banks based on their activity in attracting term deposits from the population for at least three months, and this instrument has stimulated competition in advance for term deposits CalPOMC and it's crucial to reduce exchange rate and inflationary. This instrument has stimulated competition in advance for term-heringer deposits and it's crucial to reduce exchange rate and inflationary pressures. Another important stream for our work with Festival with Ministry of Finance, was to enhance such a classic monetary policy instrument as reserve requirements and to use this instrument in a somewhat unconventional way by allowing use of government securities to meet a portion of reserve requirements, and it helped to support domestic debt market. This promotes government's borrowing from the market. It helped to achieve government rollover in 2023 and 2024 and attract net financing. It was important for us because it helped to avoid monetary financing of the budget In 2015. We moved to flexible inflation targeting. In case of classical inflation targeting, we use not only the key policy rate for our legal, but also a coordinated combination of interest rate and exchange rate policy.

Speaker 2:

All right. So, Yuri, looking forward into the future, I think many hope the war will end and the US administration will influence positively this outcome, which is undoubtedly a source of controversy, and there has been a lot of press coverage in the recent weeks. But if this path leads to a reconstruction effort and a shift into peacekeeping with EU and US support, what impact do you expect this to have on the National Bank of Ukraine? Do you build on the monetary discipline you have imposed or is there a different macroeconomic approach needed in a different political climate?

Speaker 4:

First of all, yes, national Bank. We eagerly anticipate the peace and of the world, and we already taken necessary steps to make our capital market resilient and prepared for possible recovery of Ukraine's economy. As you know, since 2019, national Bank has the depository for government bonds established with Clearstream Banking Luxembourg, and this connection allows foreign investors to buy Ukrainian domestic government debt securities without opening accounts in Ukraine to trade Gavis abroad through Clearstream system. Before the full-scale war, non-residents actively invested in Hrivnya in domestic Gavis. In February 2020, when investments peaked, non-residents accumulated 130 billions in Hrivnya portfolio, which was around 16% of the total volume of domestic government debt securities.

Speaker 4:

What is our priority nowadays? We are actively working with Clearstream to expand the link and to increase the list of financial instruments that will be available to foreign investors through the link. These include municipal bonds, infrastructure bonds and other debt instruments that will be issued to support Ukraine's recovery projects. We have already made changes to our regulations enabling Clearstream to establish a connected link with the national bank and, as I mentioned, this will provide Clearstream clients access to debt instruments and supporting Ukraine's recovery to depth instruments and supporting Ukraine's recovery.

Speaker 4:

Rebuilding Ukraine's cities and infrastructure, including energy infrastructure, will require a significant building flow of capital from international financial markets and we hope that by expanding this link we will attract new investors. It's really vital for our country National Bank established technological link to Clearstream and access to non-Gavis managed by the National Depository of Ukraine, as well as can facilitate municipalities and local businesses in accessing external debt markets. Additionally, what is important to mention, the National Bank is a shareholder of Ukraine's Central Contra Park, a settlement center. Our priority is to attract foreign business to this infrastructure. It's important for us to develop our capital market infrastructure and our important initiative is, as I mentioned, to facilitate the involvement of strategic foreign investors with expertise in infrastructure management into the capital of the settlement center and the national depository of Ukraine and, in our view, such investors will contribute to the reliable operation and sustainable development of these institutions and sustainable development of these institutions and Yuri Butser, I mean.

Speaker 1:

This is coming at a time when the speech by EU President Slavon Delayn at Davos was all about those sort of core issues which all seem to come together when we're discussing Ukraine. It's about Europe's defense, because obviously the defense of Ukraine has become a very important driver of change for European defense policy and UK defence policy. It's about capital markets and increasing sort of trade within trading blocks. It's about the weaponisation of supply chains, which very much sums up the Russian Putin's energy policies and the way he's used those as political levers.

Speaker 1:

And, of course, ukraine has huge growth potential when it comes to agriculture, green technology, all the things that the EU is focused on in an era where growth is a problem, where financing green is a problem. So it feels like you're very much at the centre of a test case for evolving EU capital markets. What's your view on that? Because it's still cheaper to raise money in the States and it's, you know, sometimes more effective to go to the IMF than it is to try and raise it in EU capital markets. This has been a big focus that we've talked about in the show and also at the Central Bank Sovereign Wealth Fund Forum. What's your view? What does the future look like? Could Ukraine become a very close ally and partner to the EU as a European country with huge growth potential in the areas of green agriculture and capital markets?

Speaker 3:

I would say that we are a perfect match here with the EU. I hope you have the biggest land mass country in Europe which shares all the EU values. We had a revolution, if you remember, in 2014 in our country, based on the fact that the majority of the population was opposing the government at the time, who didn't want to integrate more into the EU, but can speak more about the values than that, and you're right. We have a bigger agriculture market and big potential which can bring the prices down on agriculture products and help for EU countries to cope with inflation. We have a very skilled labor force. We're one of the key IT hubs of the world, which I think you put a lot of emphasis on in terms of developing and building in-house expertise. Green energy is an obvious thing. We have, first of all, a lot of. The country is big and we have a lot of potential in solar and now, unfortunately, because of Russian attacks, we have to import electricity. But what is probably important to mention here is Russia destroyed most of our coal power stations, so we're not going to rebuild them. We're going to rebuild cleaner sources of energy and we can be potentially, with the time, one of the biggest exporter to other European markets of clean energy, and I believe that that's really crucial for the general sustainability of the market. All those plus the labor force still is cheaper than in EU countries. So in terms of onshoring and bringing the production cycles closer to the markets of consumption, I think they are very well positioned as well.

Speaker 3:

So I think that the benefits you can see here, obviously, if we talk about capital markets, most of our bonds historically in the past we issued in dollars. We tried two bonds in euros and we placed them successfully. But what we figured out and I think a lot of other countries in the region figure out the same that even if you issue bonds in euro, at least half of your book there is driven by US and London-based investors, if not more, and that's an issue. So the market is deep enough for our needs, but the market risk awareness is completely different from those you can see in the US. So for the countries as Ukraine to benefit from borrowing in euros from European markets, we need to for European investors to understand Ukraine and to be able to buy those bonds, and also for the markets to be integrated and harmonized right, because it's not really a single pool of liquidity. It's still country by country. So when you do a roadshow as a debt manager in US, you go to New York and maybe Boston, right? When you do a roadshow for a debt manager in the US, you go to New York and maybe Boston, right? When you do a roadshow for a bond in Euro, you need to go through all major financial capitals of Europe and talk to each and every separately and learn their differences, because they're still domestic institutions, they're not global European institutions. In a sense, even if they have presence in all countries, they still manage those portfolios separately. So I learned at some point of time that people in Boston know much more about Ukraine than people in Munich as investors, and that's something which has to change, you know, and for that, eu institutions have to be a bit more opportunistic.

Speaker 3:

Looking outside opportunities, probably some regulations for the banks and financial institutions in EU should be harmonized deeper. The market should be really more harmonized and more concentrated. If you go beyond the bond market, which is still OTC market, right, and here post-trading is more important than the trading and let's assume that Ukraine companies want to raise equity and want to do IPOs you come immediately to this question where to list? And even if you want to benefit from EU market and list in Euro, like your bonds in Europe, you don't have obvious exchange to list because each and every country still have their own and all this pool of liquidity is not in one place, like if you look even in London, london is losing competition to US in terms of the availability of liquidity, with all the liquidity which is present in London, which is huge still, like in continental Europe. In EU there are no single hub or single place where liquidity is concentrated. So that should be sorted out for not only for Ukraine, but for any actually companies in any countries which want to raise that liquidity. So I'm very much hoping for the Capital Markets Union to be implemented. We're happy to be part of that process. We need to integrate our markets and our regulation to EU and we hope once we integrate those, we will be part of the joint market and for all the institutions to be able to operate in different markets and willing to operate. So that's I think it's really crucial for the success of this project. As I said, we want to benefit.

Speaker 3:

We see that our economy is shifting from dollar rise to euro rise. You know we see more and more trade happening in euro, it will come up more in terms of the trade flows and in terms of like you can look at Balkans, who don't? You can always test. You know what country, what currency is main for the country. When you ask what is the real estate price and what currency people quote you, those is a really good proxy for what markets and and what currency you know.

Speaker 3:

The country is more and more integrated. So in ukraine is still in dollars, but with more flows, um, from in and out in euros. Obviously we will be shifting gradually, uh to, to calculate, calculate everything in euros into and if the companies get more flow in this currency, obviously the borrowing should follow up in euros as well and with that it's important to have the harmonized market in EU. Obviously for all the economic agents in the country that's great. I know that NBU was debating whether they need to have not only a fax market in dollar but a fax market in euro. So if you want to add something to that, yes, for sure.

Speaker 4:

I understand and we have been observing the increase of transactions in euro. We have now import operations almost 50% in euro, in export operations 32% and in retail transactions around 23-25%. We have been discussing this issue with bank income here, but I believe it's like decision which will be aligned with our EU integration process. Nowadays we are focused on US dollars, but we have this issue in our focus.

Speaker 1:

Okay, now, sadly, we have to draw the show to a close here and, in fact, what has been a great year of episodes, and it feels very fitting that we're ending the season on a real high point with a hugely important issue, but also a huge financial success story when it comes to resilience, when it comes to the mechanisms of funding and financing and how crucial they are to keep the lights on and maintain strength and opposition in the face of massive challenges coming from abroad. And so I guess all that remains is from Christian myself and everyone here in the virtual studio to give a huge thank you to our special guest today, and that is the Deputy Governor of the National Bank of Ukraine, yuri Heleti. Thank you, thank you, guys, and also to the Government Commissioner for Public Debt Management, yuri Butser. Yuri, thank you very much. Thank you guys. It's a pleasure. I hope you'll come back and join us in season five.

Speaker 3:

It's going to be a great pleasure, thank you.

Speaker 2:

So that's it for Season 4, and I can only say let's meet up for Season 5. It's getting ever more interesting to follow the GFF podcast, as you can see from the last show that we had, and we have something very exciting for the start of Season 5, I can promise already yes, that's right.

Speaker 1:

we will be back in just a couple of months with another great show and more stellar guests speaking to the issues that are at the heart of european capital markets global funding, financing, repo securities, lending, you name it. We've got it coming up in season five. And if you miss us while we are away from the virtual studio on our virtual holiday in the virtual bahamas, don't worry, you can find us on our linkedin channel that is linkedincom slash company slash clear stream, where you can connect with christian and with yuri heletti and yuri boots and our very special guests throughout the season. And also you can network with me and send me feedback about the show and tell us what you'd like to see coming up in season five. And I guess, in the meantime, all that remains is for me, andrew Keith Walker and my co-host, mr Christian Rossler, to wish you a very happy few weeks. We'll see you in the next financial year From everybody here at Clearstream.

Speaker 2:

We're looking forward to seeing you again for season five after our spring break. Bye-bye.

Speaker 1:

And remember, season four of the GFF podcast is brought to you by Clearstream Banking and features members of the Clearstream team and special guests expressing their personal opinions, not the opinions of Clearstream as an organization. There is no representation made as to the accuracy or completeness of information in these podcasts and it shouldn't be taken as any legal, tax or other professional advice. We'll see you for season five.