Aleš Michl: Current fight against inflation, the course of the liquidation of Sberbank and the financial performance of the Czech National Bank

Speech by Mr Aleš Michl, Governor of the Czech National Bank, during the discussion of the "Financial Market Supervision Report for 2023" in the Senate of the Czech Republic, Prague, 25 July 2024.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Dear Chairman, esteemed senators,

The new Bank Board assumed responsibility for monetary policy and price and financial stability in our country in July 2022.

Things weren't good:

First, we had the highest inflation in our history (17.5%), leaving aside the transformation period of the early 1990s. The Czech National Bank was far from achieving its statutory primary objective of price stability.

Second, the liquidation of Sberbank was engulfed in litigation challenging the entire process – litigation by the state, filed by representatives of the Ministry of Finance, regions and municipalities, which had entrusted Sberbank with their money. An important task for us as regards financial stability and credibility was to ensure that the process of liquidating the bank was transparent, as the CNB – a member of the Sberbank creditors' committee – is responsible by law for ensuring financial stability and seeing to the sound operation of the financial system in the Czech Republic.

Third, we took over the CNB at a time when it had posted its biggest ever loss, amid record-high growth in operating expenses.

It was vital for us to tackle the situation head-on and deliver results as quickly as possible.