E-hryvnia

СBDC stands for Central Bank Digital Currency, i.e. digital currency issued by the central bank. Like physical (cash) money, CBDC is a central bank’s liability and a means of payment denominated in the domestic currency.

According to BIS report*, in mid-2023, 130 countries, which accounted for more than 98% of global GDP, were researching, implementing or using CBDCs.

Depending on the political aspects and existing challenges, the following goals of CBDC research and implementation are identified:

• increasing financial inclusion (providing/increasing access to financial services for the population without bank accounts)
• counteracting risks caused by the emergence and development of private digital currencies
• reducing costs and improving access to domestic and cross-border payments
• digitalizing the economy and tokenizing financial assets, including government assets (transformation of an asset into its digital counterpart).

The main reason for such research bringing all countries together is the digitalization of all fields of modern life, which requires new cashless payment methods and the ambition to increase the speed and convenience of payments.

*BIS - Bank for International Settlements, Central bank digital currency (CBDC) information security and operational risks to central banks

The e-hryvnia is an electronic form of the currency of Ukraine issued by the NBU. The term is defined in the Law of Ukraine On Payment Services.

If the decision to introduce the e-hryvnia is approved, it will be legal tender in Ukraine and will exist only in cashless form as a supplement to cash and cashless forms of money.

The e-hryvnia should perform all functions of money, be convenient and accessible for the public, businesses, government bodies, banks, and non-bank payment service providers, i.e. all users.

The NBU is considering to issue the e-hryvnia for the following purposes:

• to create a convenient instrument for delivering payments, in particular through programmability, while ensuring the privacy of users
• to provide users with an option of using digital money secured by the NBU and to simplify access to digital money: when a financial institution serving a user is unable to provide access to the digital money wallet, the user will only need to restore access to their wallet through another financial institution
• to provide economic security of the country and enforce the NBU’s capacity to ensure the financial stability of our country
• to foster digitalization of the economy of Ukraine
• to improve the level of financial inclusion
• to evolve Ukraine's payment infrastructure in line with global trends.

By studying the digital currencies of other central banks and working on developing its own e-hryvnia, and taking into account the survey of financial market experts, the NBU was able to identify the following key features:

• security, privacy, and safety of the public: payments in e-hryvnia are secured by the NBU, while the regulator will not have any personal information
• the option to restore access to e-hryvnia wallets 
• using DLT (Distributed Ledger Technology), which has the advantages of high data security, increased system stability and data safety through decentralization. Since transactions are verified independently by each node, which can be located in different institutions/locations, the system becomes less vulnerable to internal risks and external threats such as cyber attacks 
• offline payments is the option to deliver payments if either the payer or the payee does not have a connection to the e-hryvnia platform, and the option of delivering payments if both the payer and the payee do not have an immediate connection is also being considered
• programmability of e-hryvnia payment transactions:
  • allocating the payment to several payers, delivering payments after certain conditions occurred or for regular automatic payments (for example, real estate monthly rent) 

the option to provide targeted government aid, regardless of merchants and payment service providers.