The central bank of Ukraine has presented to interested parties a draft concept of the nation’s future digital currency, the e-hryvnia. The regulator is currently considering several potential applications for its digital coin, including retail payments and cross-border settlements.
Ukraine’s Monetary Authority Introduces Banks and Businesses to E-hryvnia Project
The National Bank of Ukraine (NBU) has presented a draft concept for its future central bank digital currency (CBDC) to representatives of banks, other financial institutions and participants in the crypto market. The regulator seeks feedback on the possible issuance of this version of the national fiat currency, the hryvnia.
The main purpose of the e-hryvnia will be to supplement the cash and non-cash forms of the Ukrainian money, the monetary policy regulator explained in an announcement published on Monday. The plan is to make it accessible to all segments of the population, legal entities, state bodies, the banking and financial sectors.
The project was launched in September, last year. Since then, the NBU has been exploring the feasibility of a large-scale issue of the digital currency. In a quoted statement, the bank’s Deputy Chairman Oleksiy Shaban emphasized that the development and implementation of the e-hryvnia can be the next step in the evolution of Ukraine’s payment infrastructure and elaborated:
[The e-hryvnia] will contribute to the digitalization of the economy, the further spread of cashless payments, the reduction of their cost, the increase in the level of their transparency, and the increase of trust in the national currency in general.
During the meeting with the interested parties, the NBU presented the draft design of the e-hryvnia, its architecture, characteristics and advantages for payment service providers, including the option for instant payments. The bank took into account the results of a survey of financial market experts on the demand for a digital hryvnia, which was conducted in 2021.
The National Bank of Ukraine is now considering several possible implementations of the e-hryvnia. Among them is the use of the CBDC for retail non-cash payments, targeted social and other government payments, and smart contracts.
The coin can also be employed to facilitate the circulation of digital assets, including issuance, exchange and other related operations. “The e-hryvnia can become one of the key elements of the qualitative infrastructure development for the virtual assets market in Ukraine,” the central bank believes. It can also enable cross-border payments, making them faster, cheaper and more transparent.
Ukraine is yet to comprehensively regulate its digital currency space. Last fall, the parliament in Kyiv, the Verkhovna Rada, adopted a bill “On Virtual Assets” which was signed into law by President Volodymyr Zelenskyy in March 2022 after certain revisions that he requested.
The country’s securities watchdog was recently tasked to prepare amendments to the tax legislation necessary to enforce the law. Meanwhile, work has begun to update it in accordance with the EU’s standards in the field. Ukraine has been relying on crypto donations to fund its defense and humanitarian efforts during the ongoing military conflict with Russia.
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