The proactive policy instruments under the outsourcing of financial stability

Анотація

Introduction. Since the beginning of Russia’s full-scale aggression, Ukraine has been receiving an extraordinary volume of international financial assistance (IFA), which enables the country to maintain a relatively high level of financial resilience under severe economic shocks caused by the war. Problem Statement. The inflow of IFA creates an illusion that it is possible to remain within the traditional paradigm of monetary policy, which has influenced both the national monetary authority and Ukraine’s international institutional partners. This paradigm prioritises price stability, while simultaneously generating risks of slowing down economic activity. Therefore, the specific conditions of ensuring financial stability need to be complemented by special instruments of proactive economic policy. The purpose is to identify financial mechanisms that would allow channeling foreign currency inflows from IFA towards accelerating economic growth and fostering positive structural change in Ukraine, without undermining macroeconomic stability. Methods. The study employs general scientific and specific methods, including analysis, synthesis, theoretical generalisation, and deduction to identify the systemic effects of IFA on Ukraine’s financial system, as well as the method of moving from the abstract to the concrete to formulate recommendations regarding financial instruments of proactive policy in the Ukrainian context. Results. The directions of use of foreign currency resources received by Ukraine in the form of international financial assistance are analyzed. It is concluded that the substantial scale of foreign exchange interventions by the National Bank of Ukraine is objectively driven by structural factors associated with the challenges of war. Attention is drawn to the “freezing” of a significant potential financial resource within the international reserves of the National Bank, and the feasibility of proactively using part of these resources through the establishment of a sovereign investment fund is substantiated, taking into account relevant international experience. Conclusions. The receipt of substantial volumes of IFA by Ukraine is a key factor supporting macroeconomic stability under conditions of “financial outsourcing”. However, the exogenous nature of these financial inflows complicates the balanced absorption of additional resources by the national economy and generates macroeconomic imbalances that weaken the effectiveness of conventional macroeconomic policy. One of the sources of such imbalances is the inflow of significant foreign currency resources not generated by domestic economic performance but driven by political decisions of international partners. The need for a proactive economic policy to ensure the resilience and post-war recovery of the Ukrainian economy calls for maximising the use of available resources capable of stimulating growth and structural transformation. One such resource is the excess portion of the international reserves of the National Bank of Ukraine. The development of non-standard methodological approaches to the use of international reserves supplemented by IFA inflows could become an important area of international cooperation and is of considerable relevance for the global financial community, given long-term projections of geopolitical and military turbulence worldwide.

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