Well here is a bit of good news for Ukrainian entrepreneurs, SME’s and big business alike.
The EBRD is going to credit Ukrainian banks in foreign currency on the proviso that the Ukrainian banks lend to Ukrainian businesses in local currency. A case of if you don’t lend the Hyrivnia, we won’t load you up with foreign currency reserves it seems.
This declared strategy from the EBRD would seem, prima facie, very good for Ukraine.
To what end and why is the EBRD prepared to share the currency conversion risks on a 50/50 basis, when Ukraine can turn on or off the Hryvnia printing presses and drastically devalue the Hryvnia overnight? I am already anticipating the devaluation of the Hryvnia around the turn of the year.
Maybe the EBRD gets half the spread on the currency transactions and is using those millions of $ a day in the exchange racket of Ukraine to bail out Greece?
Maybe with all those additional Euros flying about after the printing presses went into overdrive to recapitalise the EU banks, putting the excesses into the Ukrainian market and getting them out of the Eurozone monetary cycle works for those economic wonders in Brussels/Frankfurt. Maybe it doesn’t. Maybe if I asked 3 economists why the EBRD is doing this I will get 3 very different answers.
Bankers, economists out there – why would the EBRD be doing this (on the presumption there are no nasty little clauses in the small print)?