The Future Of Digital Money In Ukraine

At the end of 2022, the National Bank of Ukraine ("NBU") released the draft concept of its digital currency, or E-hryvnia, to the payment market and virtual assets market participants. This news has intensified discussions within the professional community about the prospects of E-hryvnia and the best model for introducing it. Let us figure out in more details what central bank digital currency is and how it can work in Ukraine.

What is digital currency?

The central bank digital currency ("CBDC") is a digital analogue of the national fiat currency, i.e. currency backed by the government. It should be distinguished from private currencies and cryptocurrencies that are not backed by state sovereignty. CBDC does not fully replace cashless payments, but supplements them. Digital currency transactions are made via a separate digital system rather than conventional banking system that ensures faster processing of payments and uses cryptography to secure transactions.