Ukraine Eyes CBDC For Retail and International Transactions

• The Central Bank has met with representatives from various sectors.
• The bank would approach the subject of creating its own digital currency cautiously.

The National Bank of Ukraine is contemplating the introduction of a digital Ukrainian hryvnia that would be suitable for a range of applications, including the distribution of virtual assets and their subsequent trade.

According to a press release issued on Monday, the Central Bank has met with representatives from the banking sector, non-bank financial institutions, and the cryptocurrency market to discuss the central bank’s plans for an electronic version of the hryvnia, the country’s sovereign currency. Furthermore, the bank is looking at how a CBDC may be used for retail non-cash payments, the circulation of virtual assets, and international transactions.

Cautious Yet Steady Approach

Since 2017, Ukraine has been among more than one hundred jurisdictions worldwide examining a CBDC. Legislation authorizing the issuance of CBDCs by the central bank, which are analogous to fiat currency or digital tokens, was signed into law by President Volodymyr Zelensky in July 2021.

Moreover, Tascombank, one of the oldest commercial banks in the nation, said last December that it will begin testing a Stellar-based electronic hryvnia. Following Russia’s February incursion, crypto was used to accept contributions and make it easier to buy necessities. Donations from across the globe reached Ukraine through crypto.

According to the central bank, the “e-hryvnia” continues to develop” with the help of the private sector and government agencies. However, the research notes that the National Bank, like other global central banks, would approach the subject of creating its own digital currency cautiously, with special attention paid to the possible effect of its adoption on the state’s financial system.