Make Kitco Your Homepage

Ukraine publishes an outline of its 'e-hryvnia' CBDC project

Kitco News

Editor's Note: With so much market volatility, stay on top of daily news! Get caught up in minutes with our speedy summary of today's must-read news and expert opinions. Sign up here!

(Kitco News) - The National Bank of Ukraine (NBU) has published a draft concept for an ‘e-hryvnia’, a central bank digital currency (CBDC) version of its national currency.

“The National Bank presented to the representatives of banks, non-banking financial institutions and the virtual assets market for discussion and feedback the project of the concept of e-hryvnia - digital money of the National Bank of Ukraine,” the NBU wrote in a statement outlining its approach to the e-hryvnia on Nov. 28.

The E-hryvnia would be “an electronic form of the monetary unit of Ukraine” and its purpose would be “to effectively perform all the functions of money, supplementing the cash and non-cash forms of the hryvnia.” The NBU wrote that they intend for their CBDC to be “convenient and accessible to all segments of the population, legal entities, state bodies, banks and non-bank financial institutions.”

"The development and implementation of the e-hryvnia can be the next step in the evolution of the payment infrastructure of Ukraine, it 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," said Deputy Chairman of the National Bank Oleksiy Shaban.

Shaban also said that the CBDC would help ensure economic security and strengthen Ukraine’s monetary sovereignty and would also strengthen the National Bank’s ability to maintain prices and financial stability “as a guarantee of sustainable economic growth.”

The NBU also presented a potential design of the e-hryvnia, its architecture, characteristics and advantages for payment service providers during its discussions with market participants. It said that “the use of a technological platform for instant e-hryvnia payments, service programming and data flow analysis” would create opportunities for new business cases, the digitalization of existing services, and other advantages.

The NBU said that during its work on the e-hryvnia concept project, it took into account the results of its own 2021 survey of financial market experts on the potential demand for the e-hryvnia, and also drew on the experience of other central banks which are developing digital currencies as well as its own research.

The National Bank is considering and developing three possible options for the CBDC:

  1. e-hryvnia for retail non-cash payments with the possible functionality of "programmed" money: for the implementation of targeted social payments, the reduction of government expenditures on administration and control of the targeted use of funds, and the use of smart contract technology in certain situations;

  2. e-hryvnia for use in the circulation of virtual assets (for example, for exchange, provision of issuance and other operations with virtual assets). The E-hryvnia could become one of the key elements of qualitative infrastructure development for the virtual assets market in Ukraine;

  3. e-hryvnia to enable cross-border payments: this would enable cross-border payments to be made faster, cheaper and more transparently.

The NBU wrote that they are continuing to develop the e-hryvnia “with participants of the payment market, participants of the virtual assets market and state bodies.” They added that the National Bank “will approach the issue of issuing its own digital currency carefully and taking into account, in particular, the potential impact of its introduction on the financial system of the state.”

The NBU launched the "e-hryvnia" project in September of 2021 to determine the feasibility of a large-scale issue of a digital form of the hryvnia in Ukraine.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.