Ukraine Imposes Capital Controls, Limits Foreign Currency Withdrawals

Tyler Durden's picture

Yesterday we reported that as part of the Ukrainian central bank's plan to bailout the nation's largely insolvent private banks, it would provide any needed funding but only "if they will remain under open control of the National Bank of Ukraine." And since the new CB head Stepan Kubiv's allegiance to Europe were already well-known, this was merely a quick and efficient way of providing Europe with all the banking details including asset holdings of the local population. Today, the annexation of the country's banking system by a "benevolent" Europe is complete.

Itar-Tass reports that Ukraine's national bank has imposed temporary limits to withdraw money from foreign currency deposits to sums equivalent to no more than 15,000 hryvnias (about $1,500) a day, National Bank Chief Stepan Kubiv told a press conference. Or, as the citizens of Cyprus call it - capital controls.

Why is Ukraine doing this? Because when your currency is crashing at a record pace to unseen lows, what is the best way to limit FX transactions? Simple - just minimize the amount of foreign currency that can be in circulation.

Which is also why the the central bank's capital controls do not touch local currency: there is more than enough of that in circulation since after all Ukraine has its own currency and can print it in infinite amounts: "For hryvnia deposits you may take as much as a million or two. Banks have liquidity," Kubiv said.

Then there was the token propaganda:

The chief banker also noted that the situation on Ukraine’s currency market was under control. "The exchange rate may move in one direction and the opposite. There are just emotions and misinformation on the financial market," he noted.


He assured the national bank would toughly stop violators of the currency law. For example, inspectors were sent to eight banks that had engaged in speculation, he said.

To summarize: first banks abdicate their control to a pro-European central bank, and now the citizens face their first (of many) capital controls which incidentally will simply aggravate the fund outflow situation even more, leading to an even faster drop in foreign reserves.

Finally comes the inflation. Wait until the people start rioting - think Egypt - when the economy collapses and a loaf of bread costs its wheelbarrow equight equivalent in Hryvnias. Just how fast will the countercoup in Ukraine take place then? Recall, in Egypt it was just over a year and a half...

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
pods's picture

Crash the hryvnia then bring in the Euro.

The EU has got them by the shorthairs now.  


CrashisOptimistic's picture

This is the case for bitcoin, and it is a compelling one.  It is the one thing that can get through the airport, and the only thing.

swmnguy's picture

Yes, that's the case for anything convertible outside the official banking system; toilet paper, coffee, cigarettes, beef jerky, pogs, marijuana, S&H Green Stamps.  The bit about "Getting It Through The Airport" certainly does favor Bitcoin over the others.  But the tangibility, the ability to visualize and understand the chain of control (either you have it and you can touch it right now, or you don't) tends to scare people off Bitcoin.  Maybe the mechanics of Bitcoin itself aren't manipulable (I suppose we could ask Fonestar what he thinks?), but obviously the exchange of Bitcoin can be compromised.  To get my coffee, you'd have to come over and take it.  You can't get it away from me from your keyboard.

maskone909's picture

its just a matter of time untill they inact pog confiscation.  i have a shit ton of gold and silver slammers

CrashisOptimistic's picture

The discussion is about capital controls.  Bitcoin is immune to xray.  Nothing else is. 

There is way too much swaggering about boating accidents and having gold at the bottom of a lake. 

It doesn't do you any good there, especially if you can't or won't ever return to the country where that lake is. 

Make no mistake about this.  A future smash scenario CAN force you to leave.  If you are going to face gold transaction taxes, you WILL convert it to currency and bitcoins and then get the hell out.  You'd be crazy not to.

maskone909's picture

all they would have to do is ban electronics from leaving the country after they set up a firewall.  then make passengers go through magnets to destroy data devices.  although, people with pacemakers and metal implants might be able to smuggle, it will be just as difficult as gold and silver.

CrashisOptimistic's picture

I don't think you understand how bitcoin works.  The "wallet" stuff could be encrypted, mislabeled and emailed to yourself.  There's nothing to magnetize.

walküre's picture

So does a stupid S&P portfolio held with an online international brokerage account. BTC is nothing but a hyped up digital stock cert.

jubber's picture

so sell Gold then the market says

greatbeard's picture

The market always says sell gold. 

skwid vacuous's picture

what happened to the other one... NATO only cashing up odd numbered ATMS now?

fooshorter's picture

if you like your attack helicopter, you can keep your attack helicopter!

q99x2's picture

Welcome to Goldman Sachs Ukrainian bitchez.

Quinvarius's picture

They already have a Department of Homeland Security too.  I am not joking.

Whoa Dammit's picture

Have they made everyone enroll in ObamaCare yet?

Fractal Parasite's picture

"Ukraine's national bank has imposed temporary limits to withdraw money"

So the foreign-owned central bank passes laws by decree and parliament is irrelevant.


Seize Mars's picture

..."So the foreign-owned central bank passes laws by decree and parliament is irrelevant."

America? Oh, you meant Ukraine.


CrashisOptimistic's picture

In the final analysis, the EU and IMF are going to realize that any money they give to Ukraine has to be sent to GAZPROM for nat gas bills in arrears.

They will scratch their heads and ask "why are we doing this?"

Quinvarius's picture

Which is why in the end, they will give them nothing--Like every other country the US and the EU have destabilized in the past ten years.

layman_please's picture

it's funny money. there's plenty more where that came from.

russians will be the ones scratching their heads if they go along with this

CrashisOptimistic's picture

You, sir, are correct.  It is when the Russians start saying "your Euro is worth nothing.  Give me aircraft carriers in return for the 6 million bpd we send to Europe" that things get ugly.

The Ukraine has to pay for nat gas with wheat calories.  Period.

layman_please's picture

"The Ukraine has to pay for nat gas with wheat calories. Period."
What does it say about the value of money? Currencies are starting to depreciate faster than rotting food.

Debugas's picture

to be able to install NATO bases in Ukraine

Quinvarius's picture

If the banks like your foreign currency, they can keep your foreign currency.

AG BCN's picture

And now the dumb money gets caught, they thought that it was all going to be roses after Yulias speech. 

It escalated rather quickly. 


ebworthen's picture

And they want to join the EU?

Out of the frying pan - into the fire.

skwid vacuous's picture

welcome to Polar Vortex of the Rothschild klan, at least they are dressed appropriately

fonzannoon's picture

any currency folks on here? Euroheading towards 1.40 and the pound heading towards 1.7? or no?

konputa's picture

It's hard to say, fonz. My opinion is that euro will probably reverse again before it breaks through 1.40.

fonzannoon's picture

thanks, that is probably correct.

konputa's picture

I wouldn't be shocked if we saw a 200-300 pip reversal over the next 2 weeks.


Maybe orly or yen cross have some thoughts to share.

itchy166's picture

Cant put capital controls on Bitcoin...

moonman's picture

Nope you can just hack them all away and you do not need to control them

Mike Hunt III's picture

Are you suggesting that a government could hack away all it's citizens bitcoins? How exactly?

viahj's picture

didn't Russia outlaw BTC?  if so, that's most def a capital control.

Mike Hunt III's picture

But it would be a capital control with no teeth. How does does a government control something over which they have no control? Money in banks on the other hand...

NoTTD's picture

Capitol controls?


It must be Friday afternoon.

TNTARG's picture

So, the banksters' "revolution" goes on and on.

It remains Venezuela, Argentina and few others, and the Banksters will control the finances of the  whole World.

Isn't that nice the way the US agencies work for the Banksters?

Yttrium Gold Nitrogen's picture

UAH gained few points today, as interbank market closed at 9.60 - 10.50 UAH/USD, up (or down, depends on the view) from yesterday lows of 10.80 - 11.10 UAH/USD. Lets see how long will it stay that way. I doubt NBU intervened today, as it simply lacks the reserves to do so.

walküre's picture

Germany's biggest energy company RWE AG lost 3 billion Euros last operating year.

They're shutting NatGas power plants because the demand for energy from traditional power plants is down as more and more alternative renewable energy has come online.

NG seems to be losing some relevance in Europe.

Chuck Knoblauch's picture

Like Saudi oil is loing relevance in the US?

CrashisOptimistic's picture

I suspect you don't understand.  That's not an "energy" company.  It's an electricity company, and electricity doesn't move food to shelves.

They get their oil from Russia, and they get their nat gas from Russia (lesser amounts from norway and netherlands) too.  At most, these renewable electricity things will provide 30% of German electric by 2030.  At most.  Nat gas mostly the rest, and oil essentially ALL of transport.



Who Laughed's picture

They will be beging for Putins helicopters..

BanksterSlayer's picture

Would I be derided as a fear-monger if I suggested that WE ALL go to our banks today and withdraw cash to get us through next month??

TPTB_r_TBTF's picture

you would be a fear monger if you told me you went diving in the lake near my house.

Debugas's picture

Ukraine got Cyprus'ed