Ukraine has passed a new law that would put its central bank digital currency (CBDC) on the same level as other payment instruments in the country.
Ukraine’s parliamentary body, the Verkhovna Rada, passed the law on payments services, making the electronic hryvnia a payment standard.
The CBDC is yet to be launched and is currently in the research and development phase, but the law indicates that the country’s officials are very keen on digitizing their economy. This makes Ukraine one of the few countries that have gone to the lengths of passing a law to recognize a CBDC. Other countries perhaps have more developed CBDCs but are yet to put them into law.
The changes under the “On Payment Services” law only briefly mentions the CBDC, but it does pave the way for adoption to take place once the digital currency is officially released.
It refers to a list of payment services and the procedure for providing these, alongside a list of categories for providers. It also speaks of infrastructure and instruments to support the new payment system.
Ukraine has been considering a CBDC since 2018, with a prototype tested on the Stellar Lumens blockchain. On other occasions, it has discussed the potential of a CBDC and involved relevant experts who have offered their thoughts on the matter. This is one of the biggest moves made in recent months and, given the explosion of interest in CBDCs globally, points to a concentrated effort in releasing a digital currency.
Ukraine joins other European nations with CBDC consideration
Ukraine is far from the only European nation — or any nation for that matter — working on a CBDC. France, Sweden, and the European Union itself are all working on CBDCs, with some pilot efforts already having taken place. These countries are all well aware of the potential in creating a digital currency — for example, in reducing transaction costs and minimizing fees associated with cross-border payments.
There is also the challenge of keeping up with other nations. China’s CBDC is among the most advanced in the world, and now many countries realize that they need to speed up their efforts if they want to stay competitive technologically. A few years ago, there was a good deal of hesitancy when it came to CBDCs, but now countries and global organizations are convinced of the benefits.
Organizations like the Bank for International Settlements (BIS) have spoken about CBDCs and have published documents relating to the same. While it accepts that there are challenges, it also says that the benefits are worth it.
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