For the first 23 years, there were no independent central bank in Ukraine. NBU was one of the participants of Ukrainian hyperinflation at the beginning of 1990s, which was higher than in all Eastern European countries. Until 2015, the National Bank helped the Cabinet of Minister to hide the real budget deficit, which became one of the reasons for full unbalancing of state funds and significant devaluation of the hryvnia.

On March 20, 1991, the Verkhovna Rada of the Ukrainian SSR adopted the Law on Banks and Banking, which stipulated the operating rules of the banking system for next 8 years – as it turned out, for independent Ukraine as well. This law was particularly important for Ukraine, because it defined the role of the central bank – future National Bank.

According to researches, the greater the independence of central banks (i.e. the ability of the management board to pass the politically independent decisions) is, the higher their effectiveness in fight against inflation is, which, in its turn, correlates with further real GDP growth. In Ukraine the independence of NBU, which became the legal successor of the central bank of the USSR, was out of question.

In the new law everything was just the opposite. The article 14 of this law directly stipulated: “The National Bank organizes and realizes through the banking system the cash execution of the state budget of the republic. According to the decision of the Verkhovna Rada of the Ukrainian SSR the National Bank can disburse the loan under the general terms to the Ministry of Finance of the Ukrainian SSR”.

Thus, this law virtually subordinated the central bank of Ukraine to the Ministry of Finance and the Verkhovna Rada. It was this law, which became one of the main reasons for hyperinflation at the beginning of 1990s, having the disruptive influence over the economy of young country, the well-being of citizens and, presumably, the mentality of many Ukrainians.