The draught design for the digital hryvnia, also known as the e-hryvnia, a central bank digital currency (CBDC), has been made public by the National Bank of Ukraine (NBU).
In its concept document, the banking regulator stated that the digital hryvnia will “complement the cash and non-cash versions of the hryvnia” while also performing all of the functions of money. According to the NBU, the CBDC must be accessible to all segments of society in order to carry out its functions, including banks and non-banking financial entities.
Three ideas for the CBDC’s design that the NBU is currently considering were proposed in the document. The first alternative, according to the banking regulator, will cut down on government spending, is to use the e-hryvnia “for retail non-cash payments with the possible capability of programmed money.”
Under the second option, the NBU is looking to deploy the CBDC in the circulation of digital assets. The central bank suggests that under this option, “e-hryvnia can become one of the key elements of qualitative infrastructure development for the virtual assets market in Ukraine.
The last option under consideration by the NBU is its usage in facilitating cross-border payments, an option that several central banks, including the Bank of Russia. NBU notes that it will adopt a slow-and-steady pace in developing its CBDC while considering its potential impact on the country’s financial system.
“The development and implementation of the e-hryvnia can be the next step in the evolution of the payment infrastructure of Ukraine,” said Oleksiy Shaban, Deputy Chairman of the NBU.
In October, the NBU trademarked the “e-hryvnia” with the Ukrainian Intellectual Property Institute. Plans for developing the CBDC have been underway for some time, with the central bank hiring distributed ledger technology (DLT) developers to work on the e-hryvnia project while collaborating with the Stellar Development Foundation.
CBDC development heats up
Central banks worldwide are picking up the pace of developing digital versions of their national currencies. These central banks are buoyed by the need to prevent the “cryptoization” of their economies due to the rising adoption of digital currencies.
China’s digital yuan has emerged as the most anticipated CBDC, given the impressive results of its pilot. By October 2022, the digital yuan had crossed transaction volumes exceeding the $14 billion mark in over 300 million transactions. Figures from the People’s Bank of China (PBoC) reveal that over 5.6 million merchant stores have provided support for the digital yuan while multiple government platforms have begun supporting both offline and online payments.
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