Speaking at an expert roundtable discussion held at the Kyiv School of Economics, Deputy Governor of the National Bank of Ukraine Yakiv Smolii said that the National Bank of Ukraine plans to reduce the amount of cash payments and increase the level of cashless payments. The representatives from the National Bank of Ukraine, the ministries and agencies, banking associations and individual commercial banks, payment systems and their associations, expert and business communities have participated in this roundtable discussion.
As of the beginning of September 2015, UAH 276 billion was in circulation outside banks. One of the main objectives pursued by the regulator when it issued a proposal to lower the upper threshold for settlement of payments in cash to UAH 50 thousand is to channel these funds to the banking system.
“Of course, to this end, we should boost the public's confidence in the banking system and all the reforms undertaken by the National Bank are aimed at achieving this goal, – said Yakiv Smolii. – Thus, the banking system clean-up has proved efficient, the institutional capacity of the regulator has been strengthened and the liability of banks’ shareholders and owners has been increased”.
He also reminded that the public consultation on a draft Regulation of the National Bank of Ukraine on lowering the upper threshold for settlement of payments in cash from UAH 150 thousand to UAH 50 thousand had run until August 25, 2015, and the Board of the National Bank of Ukraine is set to make a decision to this effect in the near future.
“However, in my opinion, it would be appropriate for this issue to be legally enshrined and for the public authorities to focus their efforts on promoting the development of cashless payments in our country,” he said.
Deputy Director of the Cash Circulation Department Oksana Halyts said that the National Bank of Ukraine had received 48 proposals and comments in the course of public consultation. The majority of participants in the public consultation have backed the proposal by the regulator to lower the upper threshold for settlement of payments in cash for individuals from UAH 150 thousand to UAH 50 thousand.
The participants in the roundtable discussion believe that the imposition of a cap on cash payments would result in the expansion of cashless payments, an increase in the inflows of funds to the banking system, the availability of additional resources for lending to the economy, a reduction in the size of the shadow economy, legalization of household income, the efficient crackdown on corruption, the enhanced transparency of financial flows and a rise in budget revenues. In addition, cashless settlements are secure for customers and enable the government and banks to reduce the cash handling costs.
Director of the Payment Systems Department Nataliia Lapko pointed out that it is important to create conditions necessary for the expansion of cashless payments through the launch of innovative payment products and the development of e-payments and their infrastructure.
According to her, another positive effect from the increase in cashless payments is the growth in consumption. Thus, according to research by Moody’s, a 1% increase in the use of payment cards leads to the growth in consumption and GDP by 0.056% and 0.032% respectively.
Overall, between 01.10.2014 and 01.07.2015, the Ukrainian payment cards market saw an increase in the value and number of transactions using payment cards, including:
- the number of cashless payments – by 8.5%;
- the share of cashless payments – by 1.0% of the total number of cashless payments with their use;
- the value of online transactions – by 2.0%;
- the number of online transactions – by 9.6%.
During the roundtable discussion, the participants formulated a number of proposals and provided comments on possible ways to reduce the share of cash payments and increase cashless payments and make them more attractive. The majority of participants in the discussion pointed out that the issue related to the reduction in cash payments should be tackled in a consistent manner.