Western creditors want to raid Ukraine’s Central Bank


June 6, 2015

Western creditors want to raid Ukraine’s Central Bank

Translated from Russian by J.Hawk

Ukraine Ministry of Finance representatives failed to reach a restructurization agreement during a telephone conversation with the special creditors’ committee.

MinFin also said that the committee’s proposal is unacceptable, since it assumes using Ukrainian Central Bank reserves to cover the country’s debts, “which would be a clear violation of Ukraine’s law.”

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Kiev also declared the necessity “to start a dialogue on the proper distribution of the debt burden among the creditors in a way that would be consistent with the IMF crediting program objectives.”

The Minister of Finance Natalie Yaresko also declared readiness to meet with the creditors in person.

J.Hawk’s Comment: This is literally the first time that anyone actually stated what ideas are running through the creditors’ heads. Any country’s central bank should, ideally, be isolated from not only the domestic political influence (well, that’s a fiction, for sure, but one most countries pay lip service to) but also from foreign control. Since CBU reserves are pretty tiny these days, involving the CBU in debt payments would imply imposing external oversight of its day-to-day activities, and in fact using it to squeeze hard currency out of the economy and the banking system–because the CBU does have that kind of power.

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