The Central Bank Digital Currencies (CBDCs) have become a relatively familiar concept for countries across the globe, and most countries are making progress toward their adoption. Joining the club is Ukraine, the second-largest European country and currently making headlines due to its ongoing geopolitical tensions with Russia.
In a recent announcement, the National Bank of Ukraine (NBU) has revealed a draft concept for its CBDC, which is digital hryvnia, also known as e-hryvnia.
As per the central bank’s statement accompanying the release of the concept of e-hryvnia, the primary purpose of the CBDC would be to perform all the functions of money by supplementing cash and non-cash forms of the currency, it also said that the concept and development of the CBDC project are taking place in collaboration with participants in the digital assets sector, payment firms, and state bodies.
Reportedly, the central bank’s CBDC would be developed to cater to the market’s diverse needs efficiently. Sources reveal that the e-hryvnia is being developed with three possible options based on its design and main features.
Amongst the three designs, the first option of e-hryvnia (retail e-hryvnia) is dedicated to retail non-cash payments with the possible functionality of “programmed” money through smart contracts. It would also facilitate the execution of targeted social payments and the optimization of government expenditures on administration.
The second digital hryvnia design aims to make the CBDC available for cryptocurrency exchange, issuance, and other digital asset operations. The announcement emphasizes that the CBDC is one of the main components facilitating the quality infrastructure development for the digital assets market in the country.
“The e-hryvnia can become one of the key elements of quality infrastructure development for the virtual assets market in Ukraine.”
CBDC’s third option deals with global payments. It includes digital hryvnia to facilitate cross-border transactions, which are faster, cheaper, and more transparent.
According to Oleksii Shaban, director of the central bank’s payment systems and innovative development department, the development and launch of the CBDC are being looked forward to by the authorities as the leading step in the overall evolution of national payment infrastructure in the country.
“The development and implementation of the e-hryvnia can be the next step in the evolution of the payment infrastructure of Ukraine.”
Additionally, the director opined that the Ukrainian CBDC could also help in boosting economic security, promote sustainable economic growth, and strengthen monetary sovereignty.
Sources reveal that the Ukrainian Intellectual Property Institute filed the trademark for e-hryvnia in October this year. The central bank has been actively working on its CBDC in recent times. It has also been hiring experienced blockchain developers and cooperating with significant industry projects like the Stellar Development Foundation, a non-profit organization that supports the development and growth of Stellar, an open-source network that connects the world’s financial infrastructure.
Several other countries have been working on their CBDCs, like Zimbabwe, Russia, Australia, etc. Recently, India entered the second phase of its CBDC pilot, which is dedicated to the retail segment and is also expected to launch within a month.
In October, Thailand suggested the trial phase of the pilot project to start at the end of this year, which will involve using the CBDC for cash-like payments for products and services.
Financial institutions across the globe are betting on the CBDC to facilitate cross-border transactions. As reported by Todayq News earlier this month, the Bank of Korea has developed and tested a strategy that facilitates cross-border payments. The bank envisions easing the process by linking different central bank digital currencies (CBDC) globally.