The National Bank of Ukraine unveiled to the banking community its new Policy on Cash Circulation in Ukraine approved by NBU Board Resolution No. 207-рш of 11 August 2016.
This policy provides for a shift from an in-house centralized cash circulation model, which is currently in place in Ukraine, to an outsourcing model.
Under the outsourcing model, the NBU contracts out part of the cash distribution functions that are performed in the regions to other market participants, including banks and Cash-in-Transit companies (CIT-companies).
At the meeting with representatives of banks, which was held at the NBU on 4 October 2016, Director of the NBU Cash Circulation Department Mr Viktor Zaivenko highlighted the benefits of a new cash circulation model.
The outsourcing model is appropriate for Ukraine in the context of common European trends, and transformation processes unfolding at the NBU, as well as implementation of the Cashless economy project. This model will help reduce cash handling costs, promote the development of a competitive market of cash-in-transit services, and increase the share of cashless payments while reducing that of cash payments,” – said Mr Zaivenko, adding that this model is used in the UK, Brazil, the Netherlands, Finland and Sweden.
Cash distribution functions shall be performed by the authorized banks. Going forward, third parties (CIT-companies) will be involved to perform these functions under the control and oversight of the NBU and in compliance with the rules set by the regulator.
The NBU shall deposit its cash reserves (banknotes and coins) in the vaults of authorized banks that meet the eligibility criteria set forth in NBU Board Resolution No. 389 of 28 September 2016.
"According to statistics, in 2015, the NBU accounted for 28% of total cash distribution operations, while the remaining 72% of these operations were carried out in the interbank market where the NBU does not perform cash distribution operations, " said Mr Zaivenko. “In order to facilitate a shift to an outsourcing model, the NBU will follow a reasonable pricing policy”.
A pilot project to implement a new model of cash circulation will soon be launched in Ternopil and Zhytomyr oblasts. A detailed Action Plan of further steps will be developed based on the pilot project results. The NBU expects that the outsourcing model of cash circulation will become fully operational by the end of 2018.
Going forward, the NBU will keep under its control two cash centers that will be used for the storage of reserve funds of banknotes and coins and cash distribution to banks and third participants in the cash cycle in Kyiv and Lviv.