The National Bank of Ukraine has decided on the directions of using the digital hryvnia

E-hryvnia is at the final stage of development. The country's financial regulator presented the results of a survey analyzing the demand for the central bank's digital currency, as well as possible options for its use, describing everything in detail in the report.

As the Head of the NBU Kirill Shevchenko noted, all over the world central banks are exploring the possibility of issuing state currencies, and the National Bank of Ukraine was among the pioneers. Ukraine has already gained experience during the launch of the e-hryvnia pilot project, so at the moment attention is being paid to finding effective ways to use it.

To do this, we decided to get the opinion of one hundred financial experts of the country's market, who represent various industries. Respondents answered 30 questions that cover six “use cases” (application options) of e-hryvnia: as a means of non-cash retail payments, targeted social payments, operations with securities and other financial instruments, corporate payments of legal entities, cross-border transfers and as a profitable financial instrument.

Based on the survey data, the main bank of Ukraine has selected three main e-hryvnia options for further study and implementation:

• retail non-cash payments with the possible functionality of "program" money and targeted social payments;
• use of virtual assets in circulation;
• cross-border payments.

Experts showed the greatest interest in the option of using e-hryvnia as retail non-cash payments, especially for P2P transfers between individuals and e-commerce transactions. The use case for cross-border transfers has also become popular. A large number of survey participants found the potential of the digital hryvnia as a tool in the field of virtual assets interesting.

Egrivna is not suitable for targeted social payments, 77% of respondents would choose this tool for the introduction of “programmatic” targeted funds that can be spent only for specified purposes. According to experts, in this way it will be possible to expand the functionality of the digital hryvnia for payments. 

Respondents agreed that CBDC should be implemented on the basis of blockchain technology.

What is NBU e-hryvnia and how will it work?

All over the world, the concept of CDBC is interpreted in different ways and there is no single strategy for development. E-hryvnia refers to a digital currency issued and controlled by the Central Bank, while it is not a cryptocurrency.

This is a fiat means of payment in electronic form, which can be exchanged for the usual hryvnia in a ratio of 1:1. The electronic hryvnia may be used confidentially, but may also contain user identification. Even fingerprints can be included in the information about the owner of the money.

The state digital currency promises to solve a number of issues, such as speeding up and making payments more secure; reduce the cost of transactions; reduce the use of cash; provide access to innovative financial services to all segments of the population.

Technically, most likely it will be implemented as an application similar to online banking.

E-hryvnia: not available for purchase yet

The regulator has not yet announced the date of the full-fledged launch of the state digital currency. The project is quite resource-intensive, although Ukraine is among the countries that have advanced the furthest in the study of the issue. CBDC is capable of solving many problems, but popularizing the new instrument will be quite difficult due to the well-established payment habits of Ukrainians.

Earlier, the National Bank of Ukraine expressed its position on the risks associated with cryptocurrencies. The Verkhovna Rada has updated the draft law "On virtual assets", the Ministry of Digital Transformation announced plans to legalize cryptocurrencies.