Since 2016, the National Bank of Ukraine (NBU) has been actively engaged in research concerning central bank digital currencies (CBDCs) and has been dedicated to crafting its own digital rendition of the hryvnia, known as the e-hryvnia.
The e-hryvnia is an electronic manifestation of Ukraine’s currency, authorized by the NBU. The primary objective behind the e-hryvnia, according to the regulatory authority, is to proficiently fulfill all the roles associated with money, complementing both physical and electronic forms of the hryvnia. Its design aims to ensure user-friendliness and accessibility across all segments of the population, including legal entities, state entities, banks, and nonbank payment service providers.
The motivations underlying the creation of the e-hryvnia are as follows:
- Enhance the Ukrainian payment infrastructure.
- Propel the digitalization of the economy.
- Further encourage and reduce the costs of noncash transactions.
- Elevate the transparency of financial settlements.
- Instill confidence in the domestic currency on a broader scale.
The implementation of the e-hryvnia has the potential to contribute positively to the country’s economic security, fortify Ukraine’s monetary autonomy, and empower the NBU to maintain price and financial stability, thereby laying the foundation for sustained economic growth.
At the present juncture, the NBU is in the process of contemplating and delineating potential applications for the e-hryvnia, which will define its structure and principal characteristics. These potential applications include:
- Retail noncash payments with the option for programmable targeted funds.
- Integration of the e-hryvnia into the realm of virtual assets.
- Utilization of the e-hryvnia for cross-border transactions.
The envisaged use cases for the e-hryvnia encompass the following scenarios:
- Facilitating retail cashless payments, offering enhanced security, immediacy, and transparency.
- Disbursing targeted welfare payments through programmable funds.
- Enabling swift settlements involving securities and financial instruments, including non-bank financial entities.
- Supporting swift wholesale payments among legal entities.
- Empowering cross-border transactions for individuals and entities.
- Offering an interest-bearing financial tool for storing and accumulating funds, distinct from a payment instrument.
In a notable development, Ukraine has chosen the Stellar Development Foundation (SDF) to collaborate on its central bank digital currency initiative. Through this partnership, Ukraine and SDF aim to establish a contemporary virtual asset market infrastructure, fostering Ukraine’s reputation as a pioneering digital nation in the Eastern European financial landscape.
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