Published since September 1958

№ 7/2020

Ekon Ukr. 2020 (7): 14–26https://doi.org/10.15407/economyukr.2020.07.014

УДК 339.97; 339.923

JEL: F33

¹Institute for Economics and Forecasting of the NAS of Ukraine, Research ID : http://www.researcherid.com/rid/
OrcID ID : https://orcid.org/https://orcid.org/0000-0001-8460-9996

“CORONA-TEST” OF THE FINANCIAL SYSTEM OF UKRAINE: EXTERNAL THREATS

After the global financial crisis of 2008–2009, experts waited for a new crisis almost every year, with particular concern in 2020. Quarantine measures taken to counter the coronavirus pandemic significantly worsened the functioning of financial institutions and created additional burden. Thus, they played the role of a kind of “corona-test”, which tested the stability of the financial system. This applies to both the world financial system and the financial system of each individual country, including Ukraine.
As for external threats to the stability of Ukraine's financial system, they mainly relate to two aspects - the level of external public debt and exchange rate volatility of the national currency.
Economics does not have an unambiguous answer to the question of the critical level of external debt, which is actually determined by the efficiency of external borrowing and the ability to service it. The current situation in Ukraine requires the authorities to have a clear understanding of it and to choose a further strategy: continue servicing the external debt under the existing conditions, declare default or a new restructuring. Each of the options creates certain risks to the stability of Ukraine's financial system, which must be taken into account in advance.
Exchange rate stability is also directly related to the state of external debt, which affects supply and demand in the foreign exchange market. In such circumstances, the refusal of the National Bank of Ukraine from exchange rate policy (free floating exchange rate policy), in fact, creates a problem of irresponsibility of the NBU for exchange rate policy. And although it can be stated that the Ukrainian financial system has so far passed the “corona-test” and proved to be more stable than some experts expected, in the event of deterioration due to the consequences of quarantine, the financial crisis in Ukraine may become a reality.

Keywords:financial crisis; coronavirus pandemic; International Monetary Fund; external debt; exchange rate.

Article original in Ukrainian (pp. 14 - 26)

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The article was received by the Editorial staff on June 25 , 2020

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