- Ukraine’s National Bank is exploring options for its CBDC
- “E-hryvnia” could help facilitate crypto trades
- Crypto has been essential for Ukraine’s war effort, officials say
Ukraine is exploring potential use cases for its CBDC, including retail payments, cross-border transactions, and facilitating crypto trades.
On Nov. 28, the National Bank of Ukraine (NBU) released a statement exploring the idea of issuing its own central bank digital currency (CBDC). Ukraine’s CBDC would be called e-hryvnia, named after its national currency.
Central bank officials claim that e-hryvnia could be “the next step in the evolution” of Ukraine’s payment infrastructure. The CBDC could help increase transparency and boost confidence in the national currency, Deputy Governor of the NBU Oleksii Shaban said.
The bank is exploring several use cases for the CBDC, which will reflect in its final design and features. For one, e-hryvnia could play a role in retail payments for social benefits. For instance, the government could issue benefits in e-hryvnia that could only be spent on certain classes of items. These “programmable money” features help the government save on administration expenses.
Moreover, e-hryvnia could also support the trade of crypto assets. The CBDC could potentially serve as an insured asset that lets users move value from crypto assets and back. Finally, e-hryvnia could also facilitate cross-border payments.
The use of e-hryvnia should be convenient and accessible to all segments of the population, authorities say. This includes legal entities, government agencies, banks, and non-banking financial institutions.
Ukraine is a Leader in Digital Innovation
The NBU’s announcement comes as part of the country’s larger digital innovation strategy, in which cryptocurrencies play an important role. In recent years, Ukraine has long been at the forefront of crypto adoption.
Officials even stated that crypto donations have been crucial for the country’s war effort against Russia. The Deputy Minister of Digital Transformation of Ukraine, Alex Bornyakov, called crypto an “essential tool of Ukraine’s defense” that literally saved their soldiers’ lives.
Ukraine is just one of the countries interested in issuing its own central bank digital currency (CBDC). Most industrialized countries are currently at least in the research phase of introducing a CBDC. Countries like China, France, Saudi Arabia, and Canada have already released pilot projects. No country has yet attempted a full-scale launch, however.
On the Flipside
- CBDCs are the target of criticism due to concerns over privacy and civil liberties. CBDCs give too much power to the state, critics say.
Why You Should Care
CBDCs could potentially compete with more decentralized digital currencies, especially stablecoins and Bitcoin.
Read more about what CBDCs are and how they could work:
CBDC Explained: Everything You Need to Know About Central Bank Digital Currency
Learn about some of the common criticisms of CBDCs:
CBDCs Simply Don’t Work — For Anything