The Digital Hryvnia: Understanding Ukraine's Future Currency

Many central banks globally, including the ECB, are exploring the creation of their own digital currencies (CBDCs). The primary motivations behind this initiative are to modernize financial systems in response to digitalization and to enhance the convenience of cashless transactions.

Some countries have already initiated pilot projects involving digital currencies, including Turkey, Sweden, and Singapore, while others like Nigeria have launched CBDCs. The ECB is preparing to test a digital euro, reflecting a global trend toward digital finance.

The National Bank of Ukraine is also assessing the feasibility of introducing a digital hryvnia (e-hryvnia). This currency aims to complement cash rather than replace it, offering more options for financial transactions.

Currently, no decision has been made regarding the large-scale issuance of e-hryvnia, but preparations for a pilot project are underway. This will utilize DLT (Distributed Ledger Technology), allowing real users and payment providers to test the system.

As with any innovation, there are numerous questions. The National Bank of Ukraine has published answers to the most frequently asked questions about e-hryvnia on its website, helping the public understand its concept and future prospects.

1. What is the e-hryvnia?

The e-hryvnia is a digital representation of Ukraine's currency issued by the National Bank. It acts as an equivalent to physical money, existing solely in electronic form while fulfilling all monetary functions.

2. Why does Ukraine need the e-hryvnia?

The National Bank considers the e-hryvnia for:

• creating a convenient payment tool;
• simplifying access to digital currency;
• ensuring economic security;
• enhancing financial inclusion;
• developing the payment infrastructure.

3. How can the e-hryvnia be used?

Users will be able to perform various payment operations, such as:

• transfers between individuals;
• payment for goods;
• payments to the government;
• charitable donations;
• receiving salaries and social benefits.

4. Will cash disappear with the introduction of the e-hryvnia?

Cash will not disappear in Ukraine. The National Bank does not plan to abandon cash, as the hryvnia remains a legal tender.

The e-hryvnia will complement cash and non-cash forms of money, giving users the freedom to choose their payment method.

5. Will confidentiality be preserved?

Confidentiality in using the e-hryvnia will be maintained. The National Bank will not store personal data of users, while financial institutions serving them will safeguard this information.