The National Bank says that currency restrictions are losing their effectiveness and restraining economic activity.

According to Volodymyr Lepushynskyi, director of the Department of Monetary Policy of the NBU, the disadvantages of this mechanism has begun to exceed the advantages. He added that fixing the exchange rate in combination with currency restrictions was very effective at the onset of wartime conditions. However, over time this mechanism’s shortcomings begin to prevail. Economic imbalances accumulate, and the possibilities of its adaptation to changes in external and internal conditions are limited.

“Currency restrictions lose effectiveness over time because conditions change, and businesses find ways to circumvent them. In addition, their preservation can unnecessarily distort the business environment and restrain economic activity”, he clarified.

The NBU is convinced that moving to greater exchange rate flexibility is necessary, and further, that it is necessary to ease currency restrictions gradually and carefully.