Thursday, October 30, 2014

Safe-Deposit Box Craze Lays Bare Ukraine Woes After Vote | Johnson's Russia List

(Bloomberg – – Daryna Krasnolutska – October 29, 2014) Wary of banks and alarmed by armed conflict around her parents’ town, Daria Demianenko joined Ukraine’s rush to an old-fashioned way of squirreling away cash.

More commonly known as a home for fancy jewels and ill-gotten gains, safe-deposit boxes are swallowing a growing chunk of regular savings in Ukraine. For Demianenko, a 32-year-old accountant, the box she rents for $8 a month means capital controls can’t block her family’s access to money.

“The central bank is tightening the screws — you can withdraw less and less,” she said by phone after stashing more than 10,000 euros ($12,700) in the Ukrainian capital, safely away from the eastern unrest. “We had to visit many banks in order to find a box. There’s a craze for them now in Kiev.”

The dash to this outmoded means of hoarding savings highlights the economic challenge facing Ukraine’s newly elected parliament. Already grappling with the fragile truce in the eastern insurgency, lawmakers chosen Oct. 26 must also rebuild confidence in the financial system to rescue this year’s worst-performing currency, keep a $17 billion bailout flowing and revive an economy forecast to shrink 10 percent.

The turmoil has sent the hryvnia plunging 36 percent against the dollar in 2014. While it gained 0.8 percent today in Kiev, its weakness has helped to erode faith in banks. Ukrainians have withdrawn about a third of retail deposits, exceeding 100 billion hryvnia ($7.7 billion), central bank Governor Valeriya Gontareva said last month.

Complete story at - Safe-Deposit Box Craze Lays Bare Ukraine Woes After Vote | Johnson's Russia List

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