National Bank of Ukraine’s Shevchenko: ‘We will work until Ukraine has victory’
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National Bank of Ukraine’s Shevchenko: ‘We will work until Ukraine has victory’


Kyrylo Shevchenko, governor of the National Bank of Ukraine, has been corresponding with Euromoney as war rages in his country. Here he tells us how the central bank has kept the banking system operational and protected the currency in extraordinary circumstances.

Eric Ellis, Euromoney Can you describe your working conditions? A typical day now?

Governor Kyrylo Shevchenko, National Bank of Ukraine My day begins with news about the situation on the frontlines and a quick review of data on the standing of the banking system and financial markets. This information lays the foundation for further work, which lasts as long as is necessary to address all pressing issues within the National Bank of Ukraine’s purview. All key employees and divisions of the NBU are engaged in this work 24/7 as required.

Euromoney How is your working day different, procedurally, than it was before the February 24 invasion of Ukraine by Russia?

Bio: From miner to governor

Born in Russia during Soviet times, one-time miner Kyrylo Shevchenko has been the governor of Kyiv's central National Bank of Ukraine since 2020. Widely seen as a technocrat, Shevchenko was chosen as governor by Ukrainian president Volodymyr Zelenskyy a year after Zelenskyy was elected in a 2019 landslide.

An economics graduate in 1994 of Kharkiv's National University of Economics, Shevchenko has spent much of his career as a banker, serving in management and advisory positions at mostly state-owned Ukrainian banks, before becoming the 12th person in Ukraine's 31 years as an independent nation to serve as NBU governor.

Shevchenko It used to feel like I had workdays and weekends. The feeling of there being weekends is now gone. My team and I have stopped bothering with dress code and other formalities.

The main difference is that all of the central bank’s activities are now guided by the military situation. Our main goal is to ensure Ukraine’s financial stability even as Russia wages its war of aggression, and to help end this war as soon as possible, in particular by weakening the aggressor’s ability to finance it.

The stable and uninterrupted operation of the banking system, which we have managed to maintain for more than two months since the war broke out, should not be taken for granted. It has come at a price. This resilience has been the result of constant coordinated efforts by the NBU and banks.

By way of example, the discussion of several key decisions by the NBU was interrupted by multiple air-raid sirens. As a result, these decisions were eventually made in bomb shelters.

But it’s clear that the Ukrainian financial system has already successfully passed this ‘crash test’ and continues to be stable and liquid.

Euromoney Practically, are you able to work and function much as you did before February 24?

Shevchenko It was hard to believe that in the 21st century a full-scale military attack was possible at all. But, with Russia’s insidious actions in 2014 still fresh in our memory, we were getting ready. In the first hours of Russia’s assault on Ukraine, we implemented our action plans to ensure the smooth and stable functioning of the banking system and the NBU.

Our experience from the coronavirus crisis also helped. In the two years leading up to the invasion, we developed a well-established process of remote work. As a result, most employees of the NBU’s central office can effectively discharge their duties under any circumstances without being tied to the workplace.

Do you have any advice for Elvira Nabiullina (the governor of the central bank of Russia)?
I recommend that she read the biography of Walther Funk
Kyrylo Shevchenko

After February 24, the NBU changed the way it runs its operation. Some colleagues evacuated from dangerous areas and are working in relatively peaceful conditions, while others continued to do their job even as their locations came under regular shelling and even shooting from the enemy troops.

However, the efficiency and coherence of the NBU’s operation has not been affected. On the contrary, as this horrible reality unfolded, we mobilized ourselves very rapidly: work issues are being resolved quickly and I can feel that my colleagues are working as hard as is humanly possible in wartime.

The result speaks for itself. It sounds like a miracle, but now our banking system is in full operational mode, I mean payment systems, debit/credit cards etc. About 75% of the branches of systemically important banks operate in the areas where their operation is not endangering lives.

Euromoney Have you and your staff taken up arms for self-defence?

Shevchenko Seventy-six of our employees are currently defending Ukraine in the armed forces and the territorial defence force. Other colleagues continue to work at the NBU, ensuring Ukraine’s financial defence on their professional frontlines. Unfortunately, there have been casualties among our colleagues.

A building destroyed by shelling in Borodyanka, in the Kyiv region. Photo: Reuters

Euromoney Is there actual cash on the NBU premises? If so, how much?

Shevchenko I can’t answer this for security reasons. However, I assure you that from the first days of the war, the NBU has been providing unlimited cash to banks and maintaining the liquidity of the banking system. And this effort continues. Banks, when safe for clients and staff, continue to refill ATMs and support cashless payments.

Euromoney Please describe the adjustments the NBU has made to enable and assist commerce in the absence of cash transactions.

Shevchenko First, since the beginning of Russia’s military invasion, we have done everything in our power to ensure that cashless payments continue to go through normally and without restrictions. After all, we understood that with hostilities raging on, cashless payments are one of the safest and most reliable ways to pay. The NBU has not put any restrictions on cashless payments in Ukraine. That includes card-based retail settlements for goods and services. And we also appealed to retail chains, shops, pharmacies and gas stations, asking them to accept cashless payments.

Second, we have ensured the reliable operation of the NBU’s electronic payment system. It’s working as smoothly as before. Payments are being made 24/7.

Even in wartime, cashless payments have been taking place without restrictions and interruptions
Kyrylo Shevchenko

Third, we appealed to retail chains, banks and payment systems to expand the options for payment card users by giving them cash back at checkout in stores and by ensuring the possibility of making cashless payments for goods. This supported cashless payments and helped solve three problems at once: individuals have access to cash when they urgently need it, retail chains have thus reduced their collection needs and banks are no longer exposing collectors to unnecessary danger. This initiative was actively supported.

Currently, over a thousand retail businesses around Ukraine are ready to pay out cash from payment cards. According to the NBU data, the number of PoS [point of sale] terminals that offer this option is no less than 35,000. We can therefore declare that even in wartime, cashless payments have been taking place without restrictions and interruptions.

Euromoney How are you able to track and distribute cash around the country? Where are there critical shortages of cash?

Shevchenko After martial law was imposed, we introduced a number of measures to quickly analyze the cash needs of the banking system. We also launched the round-the-clock cooperation with authorized banks in order to effectively distribute cash in the regions that need it. At the same time, the level of cash in circulation has recently been trending down compared to the strong demand for cash seen at the outbreak of the war.

According to our analysis of cash circulation conditions, the critical need for cash hryvnias has been felt since the imposition of martial law in Ukraine. Regions where active hostilities are taking place are hurting for cash. The provision of cash in such regions is carried out in compliance with all security measures, through safe access routes and in a manner that respects the curfew.

Euromoney What special measures have you undertaken in ensuring adequate cash circulation?

Shevchenko We are taking all necessary measures to ensure the normal provision of all regions of Ukraine with cash. We are in constant contact with the banks and we see that they are working honestly for this.

We have also set up a working group to work on issues related to the functioning of Ukraine’s banking system in territories that have temporarily been forcibly removed from under Ukraine’s control or that are under threat of occupation by the aggressor state. If required, we will also involve banks in its work in order to promptly resolve all problematic issues that may arise in wartime.

Let me also add that we deem unacceptable the Russian Federation’s and the Russian central bank’s actions to limit the circulation of cash and cashless hryvnias and introduce the Russian rouble in the territories of Ukraine that have temporarily been forcibly removed from under Ukraine’s control or been threatened to be occupied.

After receiving information from the media about Russia’s attempts to put into circulation the Russian rouble in the Kherson region, we alerted the world community to this blatant violation of international conventions
Kyrylo Shevchenko

Under the constitution of Ukraine, the only currency accepted as legal tender in Ukraine is the hryvnia. Ukraine’s banking system has the capability to provide all necessary services to the Ukrainian population and the NBU and Ukrainian-based banks are fully capable of ensuring the circulation of the hryvnia, in accordance with Ukrainian legislation, in the areas temporarily occupied by Russia.

After receiving information from the media about Russia’s attempts to put into circulation the Russian rouble in the Kherson region, we alerted the world community to this blatant violation of international conventions. Such actions contradict the requirements of the Hague Conventions, according to which the occupier must ensure the restoration of public order and security in compliance with the laws in effect in the country at the time of occupation.

We have also called on the Office of the Prosecutor General of Ukraine to take this information into account as it prepares to file lawsuits with relevant international courts.

Euromoney Please describe the measures through which you have been able to maintain currency stability.

Shevchenko First, a pre-designed contingency plan helped the smooth operation of the financial system. We have considerable experience operating under administrative restrictions, and it is an additional lever. As soon as we realized that Russia had attacked Ukraine, we therefore were able to quickly impose the necessary restrictions that helped us maintain the stability of the financial system. Time was of the essence. An important prerequisite for the operation of restrictions is a stable and healthy banking system.

Second, Ukraine has managed to accumulate a significant margin of safety through a prudent macroeconomic policy. That includes a moderate budget deficit, a reduced debt burden, control over inflation expectations, a floating exchange rate and significant international reserves. Thus, at the end of last year, Ukraine’s international reserves amounted to almost $31 billion. This is the highest annual level of reserves over the last nine years.

As a result, even at the beginning of the war, despite a significant shock, the deviation of the exchange rate in the black market from the official exchange rate was moderate, somewhere between Hrn39 and Hrn40 against the US dollar, compared to the official Hrn29.25 per dollar rate. The black-market exchange rate is currently even closer to the official rate and is about Hrn33 to the dollar.

Euromoney What has been the worst crisis you have faced since the February 24 invasion? How did you deal with it?

Shevchenko In the first few minutes of Russia’s insidious assault on Ukraine it was hard to realize that the aggressor was in fact invading throughout the country. And then it dawned on me that our entire nation had indeed come under massive attack and that a full-scale war was underway. These were the first moments. And then I had this feeling of internal mobilization. And then I felt the full weight of my responsibility to implement the emergency plan we had in place.

What we did first thing that morning was to convene a board meeting and take the steps required to safeguard financial stability. Those measures defined the new rules of operation of both the banking system and the FX market.

So exactly what did we accomplish that day? First, we preserved the full freedom of making cashless payments and introduced blank refinancing, a special tool designed to support bank liquidity. It was decided that ATMs would be supplied with as much cash as was needed.

Second, we imposed a number of administrative restrictions, including by suspending the FX market of Ukraine, except for transactions to sell foreign currency to customers. We also fixed the official exchange rate at the February 24, 2022, level. We limited cash withdrawals from client accounts to Hrn100,000 [roughly $3,400] per day. These timely decisions allowed us to maintain financial stability in Ukraine.

Euromoney What has been your best day since the invasion?

Shevchenko My best day has yet to come. The best day will be the day of our victory.

The liberation of the Kyiv region from Russian invaders came as a vital and long-awaited piece of news. But the horrors that Russian troops have committed around Kyiv and that they continue to perpetrate against the civilian population in the cities under Russian control are... for lack of a better term... unspeakable. It is hard to imagine how something like this could go down in our day and age... how this could have been done to unarmed people, including children who were just trying to survive that hell? The help of our partners, as well as support from people from around the globe who have been aiding our army and citizens, is strengthening our faith in our victory.

The headquarters of the National Bank of Ukraine in Kyiv. Photo: Getty

I would like to remind you that now everyone can financially support Ukraine. To make it possible, the NBU on the first day of the war opened a multicurrency account for donations to the military. We have also set up an account for humanitarian aid for Ukraine.

Overall, the equivalent of more than €500 million has been wired into these accounts [between the day of their opening and April 25]. That includes the equivalent of more than €485 million in donations for the armed forces and the equivalent of more than €15.5 million in humanitarian aid.

We are grateful to everyone who has helped the Ukrainian army and the Ukrainian people in general.

Euromoney How long do you expect the NBU to be able to operate satisfactorily in the current manner?

Shevchenko In this manner, we will work until Ukraine has victory. Going forward, as the functioning of the economy and financial system normalizes, one of our main tasks will be to gradually return to the regime of inflation targeting with a floating exchange rate and the cessation of monetary financing of the budget.

In addition, we understand that some reforms in the financial sector have now been put on hold, but we will definitely return to them after the victory, as they are an important prerequisite for the rapid recovery of our country.

Euromoney How many commercial banks are operating now compared to February 23? Where has been the biggest practical impact of the war on the banking sector?

Shevchenko Before the war, there were 71 banks in Ukraine, including 16 banks of foreign banking groups. Currently, 69 banks are operational, because in the first days of the war, the NBU revoked banking licences from and liquidated Russian-controlled banks. Those were International Reserve Bank JSC, owned by Sberbank of Russia PJSC (holding 100% of the bank’s capital), and Prominvestbank PJSC, with VEB.RF holding 99.77% of the bank’s capital.

For two months running, the remaining banks have been operating smoothly under the extremely difficult conditions of martial law. For the smooth and stable operation of banks during martial law, we have regulated the use of cloud services by banks.

Euromoney Please describe the current state of the banking industry in Ukraine.

Shevchenko The NBU and the banking system have successfully passed this unprecedented crash test, thanks to a good margin of safety and coordinated professional actions since the day the war was unleashed. Banks remain liquid and capitalized and have a stable funding base. The amount of client deposits in the banking system has even increased: as of April 22, they have risen by the equivalent of Hrn83.6 billion, up from February 24, 2022, the day the full-scale invasion started. Hryvnia retail deposits have actually increased by 21.6% since the beginning of hostilities.

To cover potential deposit outflows, banks hold a sufficient stock of high-quality assets and have access to refinancing instruments. At the start of the war, we introduced additional blank refinancing loans with up to one year in maturity. Demand for funding was strong immediately after the outbreak of hostilities, but now banks are actually repaying loans ahead of maturity. Thus, the volume of blank refinancing loans taken out by banks fell below Hrn9 billion, less than one-third of its peak value of Hrn32.3 billion seen in early March.

We are doing our best to ensure that the Ukrainian civilians, soldiers, businesses and the state feel confident about their finances, have timely access to personal funds, financial instruments and assistance
Kyrylo Shevchenko

The banking system is therefore holding up well, people’s cards are working and cashless payments are being made smoothly and without restrictions. In the second half of March, the level of cash in circulation began to decline compared to the significant demand for cash seen at the outbreak of the war. After all, people have realized that all payment services are working, customer payments are going through as usual, cards are being accepted everywhere except for areas of active combat. This was achieved thanks to the joint concerted actions of the NBU and all of the banking system participants.

We are doing our best to ensure that the Ukrainian civilians, soldiers, businesses and the state feel confident about their finances, have timely access to personal funds, financial instruments and assistance. We therefore ease restrictions as soon as we can. An important decision was recently made and the ban on the sale of cash foreign currency to individuals was lifted.

To support banks, we have simplified the requirements for their current operation by allowing them to pursue loan repayment holiday policies that best suit them and we’re not applying corrective actions to banks that breach the required ratios. We realize that the reduction in lending, the loss of income and the loss of part of the loan portfolio will reduce banks’ capital. However, banks will keep operating even if their capital adequacy ratios fall below the required threshold. After Ukraine wins the war, they will have enough time to bring their activities back to normal and reestablish their capital buffers.

Realizing that under difficult combat conditions, new lending will be mainly supported by government programmes, the NBU has actively joined the initiative to expand government support programmes, including the Available Loans 5–7–9 programme and portfolio guarantees.

We will continue to respond promptly as the banking sector situation unfolds and apply all available mechanisms to ensure the continuity and sustainability of banks.

Photo: Reuters

Euromoney What particular extraordinary or defensive measures have you taken since the invasion to protect the currency and the economy?

Shevchenko In the early hours of the war, we passed a resolution imposing administrative restrictions on the banking sector and the FX market. We fixed the exchange rate, put limits on cross-border and FX transactions, and expanded bank refinancing instruments. In this way, we implemented a contingency plan prepared in advance, which helped us maintain financial stability.

In addition, from the outbreak of the war, we have been actively negotiating with international partners to impose sanctions on Russia and Belarus in order to weaken their ability to sustain the Russian army. We can see that this effort is already working, but as long as the war continues, we have no right to stop fighting.

We also made a difficult decision to support the state budget and have already purchased Hrn60 billion of war bonds. This is necessary in order ensure that Ukraine can properly repel Russia’s large-scale war of aggression.

At the same time, to mitigate the risks of high inflation, avoid losing confidence in the NBU and prevent complications for European integration, we declared that the NBU will finance the budget in limited amounts and that such funding should not be the only source of replenishing the budget. As the functioning of the economy and financial system normalizes, the NBU will abandon this practice.

Despite the fact that our main focus now is on maintaining financial stability and countering the aggressor on the financial front, we are constantly keeping tabs on the health of the Ukrainian economy. We carry out, in particular, the web scraping and analysis of high-frequency indicators that help us estimate the rate of price growth and economic activity even in the absence of official data.

It is important to understand that before Russia’s full-scale invasion, we made a massive effort to shore up the resilience of our economy and those efforts are now paying off by helping us maintain financial stability and work to prevent significant macroeconomic imbalances.

Euromoney How are the reserves now compared with before February 24?

Shevchenko As of April 22, Ukraine had about $27 billion in international reserves. That is to say, they are now at the same level as when the war broke out, primarily due to support from international financial institutions, which has exceeded $4 billion.

Given that most transactions in the FX market are now carried out with the NBU’s participation because of the forced imposition of restrictions, Ukraine spends its reserves primarily on the purchase of critical imports. In addition, the government has not stopped and is not planning to stop servicing public debt, which, in my opinion, is the only right strategy.

The NBU and the ministry of finance are working through every possible option for raising funds to maintain the state budget, balance of payments and sufficient reserves.

With Russia’s assault on Ukraine raging on, our country is in dire need of resources, including financial support, to counter this aggression
Kyrylo Shevchenko

An important step in this direction was the opening of a special IMF-administered account to accumulate funds for supporting our country.

We are also grateful to colleagues from the World Bank for launching the Multi-Donor Trust Fund for grants and the FREE Ukraine initiative to help Ukraine (FREE as in Financing of Recovery from Economic Emergency).

With Russia’s assault on Ukraine raging on, our country is in dire need of resources, including financial support, to counter this aggression.

Euromoney Can you describe the degree of support you have received from foreign central banks? Please elaborate on the type of relationship the NBU has with foreign central banks now compared with before February 24?

Shevchenko The NBU has friendly and strong relations with the central banks of many countries. Even in the days leading up to the war, we had meetings planned that had to be postponed as the war began and that were eventually held during the invasion, both at our request and at those of our partners. Specifically, several weeks into the war, we had meetings with representatives of the central banks of Georgia, Sweden, the United Kingdom, the Netherlands, Belgium, Croatia and France.

The main focus was on support from our international partners as we fight, on the financial frontline, to combat Russia’s aggression. Focus was also placed on financial assistance for Ukraine. We also held a series of meetings with the central banks of the countries with the largest number of Ukrainian refugees in order to solve the problem of exchanging their cash hryvnias for local currencies. As a result, in March we signed a cash exchange agreement with Narodowy Bank Polski. Negotiations with other central banks are ongoing.

At the same time, unlike in the first days of the war, Ukrainians can now exchange cash hryvnias in other countries as well. Among other places, this can be done at Raiffeisen and Erste Bank branches in Austria, OTP Bank in Moldova and Hungary, Banca Comercială Română in Romania and Tatra Bank in Slovakia. This is the result of the rapid easing of NBU restrictions and direct efforts by banks. In addition, we have signed an agreement with Narodowy Bank Polski for a hryvnia/dollar currency swap of up to $1 billion. We thank our Polish colleagues for lending us a helping hand in this way. We are now expecting decisions by European central banks regarding the opening of swap lines and other mechanisms to support Ukraine.

In addition, we have addressed central banks with requests to grant us armoured vehicles so that our government can safely evacuate Ukrainians from the most dangerous locations through what are known as ‘green corridors.’ The Bank of Lithuania and Narodowy Bank Polski responded to our request and have already provided us with the necessary cars. We are also currently awaiting armoured cars from Narodna banka Slovenska and the Bank of England.

Unfortunately, Russia’s full-scale war of aggression continues and so we need significant funding and further support from our international partners. We must do all we can together to end this brutal onslaught as soon as we can.

We can do this by limiting Russia’s access to global finance. This is why I call on international partners to freeze the assets of Russian-based banks and discontinue all correspondent relations with them. Apart from that, subsidiaries of Russian financial institutions also continue to pursue Russia’s government strategy abroad by using various methods to evade sanctions outside Russia and may be complicit in the development of sanction-avoidance schemes. I thus hope that you will respond to our appeal and implement measures to increase pressure on the Russian financial system.

Smoke rises above a plant of Azovstal iron and steel works in the southern port city of Mariupol. Photo: Reuters

Euromoney Please describe the current relationship with the central bank of Russia. How has it changed, if it has changed, since before February 24?

Shevchenko The NBU has no relations with Russia’s central bank.

Euromoney What do you need the international community to do to assist?

Shevchenko From the very beginning of the war, we have been urging our partners to stop supplying cash and foreign currency to Russian and Belarusian banks. As we can see, the EU Council has banned the sale, supply, transfer or export of euro banknotes to Russia. The US president also signed an executive order banning US financial institutions from supplying US dollar banknotes for further distribution or supply to the government of the Russian Federation or to any entities based in the Russian Federation.

Euromoney Who have been the main buyers of Ukrainian war bonds?

Shevchenko Primary dealer banks now hold the largest portfolio of military domestic government debt securities. But the Ukrainian people and businesses are actively increasing investments. As of April 25, the number of retail and corporate depositor institutions in Ukraine has grown to 9,100, while their portfolio stands at almost Hrn5.8 billion, $36 million dollars and €25.2 million. Since the beginning of the war, non-residents have become owners of more than Hrn50 million of military bonds.

In total, since the beginning of Russia’s full-scale attack on Ukraine, the ministry of finance has raised more than Hrn36.6 billion, almost $93.8 million and €176.5 million through 20 auctions.

The NBU has also bought Hrn60 billion of war bonds through an agreement with the ministry of finance. That is, the funds raised through the war bonds came as an addition to those raised via auctions.

Let me remind you that foreigners can also buy military domestic government debt securities to strengthen Ukraine’s financial frontline.

Euromoney The IMF forecast a deep recession for the Ukrainian economy – that GDP will drop by at least a third. What is the NBU’s assessment?

Shevchenko In the first days of the war, the economy was working at half its capacity, according to our estimates. But now we are witnessing a fairly rapid transition of businesses to what we call a 'military track'. The number of companies that completely ceased operations fell from 30% in the first weeks of March to 23% now. Logistics are gradually being revitalized, including with the help of Ukraine’s international partners.

At the same time, the war continues as Russian invaders kill our people, destroy infrastructure and critical facilities, loot and do other terrible things. Russia’s assault on our country has led to the breakdown of industrial ties and a surge in forced migration, which makes us realize that the war will result in tremendous losses. By our estimates, the Ukrainian economy will gradually recover, but real GDP could drop by at least one-third in 2022.

However, any assessment is now very conditional, given that Russia’s armed offensive is still underway. The final economic impact of the war will primarily depend on the duration of hostilities.

But I believe that we have every chance to rebuild Ukraine quickly, thanks to large-scale international support, further reforms and our country’s integration into the EU.

Euromoney Do you have any advice for Elvira Nabiullina (the governor of the central bank of Russia)?

Shevchenko I recommend that she read the biography of Walther Funk.

[A German economist, Walther Funk was the governor of Germany’s central Reichsbank under Nazi rule from 1939 to 1945, while simultaneously serving as Adolf Hitler’s economy minister from 1938 to 1945. He was later tried at the Nuremberg Military Tribunals, where Allied prosecutors dubbed him ‘The Banker of Gold Teeth,’ referring to the Nazi practice of extracting gold teeth of Holocaust victims to be melted down into gold bullion for Reichsbank reserves. Funk was convicted at Nuremberg as a war criminal and sentenced to life imprisonment in Berlin’s Spandau prison. He died in 1960.]


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Eric Ellis
Eric Ellis has covered Asia for Euromoney since 2006. He is a former southeast Asia-correspondent for Fortune Magazine and Time, and an ex-Asia correspondent for Australia’s economic and business newspaper the Australian Financial Review.
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