The National Bank of Ukraine continues to study the possibility of issuing a digital equivalent of the hryvnia. This was stated by NBU Chairman Kyrylo Shevchenko.
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To that end, the regulator has initiated the draft law “On Payment Services,” defining central bank digital currencies (CBDCs) and enshrining the NBU’s right to issue them. In mid-November the document introduced to the Verkhovna Rada of Ukraine.
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According to Kyrylo Shevchenko, the NBU is focusing on building a legal framework that would confer CBDCs with the status of legal tender, which cryptocurrencies do not have. The regulator identified several possible use cases for the electronic hryvnia:
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“We are focusing on possible use cases and studying the needs of market participants and consumers of the financial market, taking into account the best global practices,” explained Shevchenko.
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The launch of the e-hryvnia entails creating a payments infrastructure for market participants. The NBU is also examining the potential impact of the e-hryvnia on macroeconomic and financial stability of the country.
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“The volume of investments will depend on the purposes for which the electronic hryvnia is intended. Will it be used for retail or corporate payments? The implementation of such a large-scale project will require active participation from all market players,” added the head of the NBU.
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Accelerating work in this direction will be aided by the draft law “On Virtual Assets,” which the Verkhovna Rada adopted in the first reading on December 2.
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Earlier steps toward introducing the e-hryvnia were taken as far back as late 2016. At that time, the NBU, together with leading Ukrainian blockchain experts, began examining international experience, risks and benefits of existing technological solutions for the country’s financial ecosystem.
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The regulator defined the new asset as electronic fiat currency that should be exchanged for cash or cashless funds at a 1:1 ratio.
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Pilot testing of the innovative payment solution began in June 2017. During the tests, the NBU issued coins totaling about 5,000 hryvnias. Working groups assessed the feasibility of creating and topping up an electronic wallet, as well as the potential of blockchain technology for CBDC issuance.
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In January 2018, the NBU clarified that the e-hryvnia would not be a “cryptocurrency issued by the National Bank,” but a regular payment token.
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In February 2020, the NBU, together with blockchain company Distributed Lab, presented the MVP of the digital hryvnia system. The results of the e-hryvnia testing were presented to representatives of ten central banks.
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