Ukraine’s central bank has been given formal permission to issue digital money

• The Ukrainian government may now proceed with its plans for a central bank digital currency (CBDC) since the National Bank of Ukraine (NBU) has been granted legal permission to develop a digital currency
• The bill on payment services, which was initially passed by the Ukrainian parliament in late June, aims to implement open banking, which is the practice of giving third-party apps access to and control over consumer financial information
• According to earlier reports, the NBU has been considering the creation of a digital currency for some years, noting the potential for a CBDC to increase public trust in the central bank and its financial services

The National Bank of Ukraine (NBU) is now formally allowed to create a digital currency, allowing the Ukrainian government to go on with its central bank digital currency (CBDC) plans. According to a Thursday statement, Ukrainian President Volodymyr Zelenskyy has signed a bill titled On Payment Services, allowing the country’s central bank to issue a CBDC or digital hryvnia. The new law gives the NBU the authority to create regulatory sandboxes to test payment services and instruments based on emerging technologies. According to the statement, the new legislation also demands tight coordination between the Ukrainian central bank and local entrepreneurs in the payment industry, taking into account private sector demand.

The On Payment Services bill, which was first passed by the Ukrainian parliament in late June, intends to introduce open banking, which is the practice of providing access and control to customer financial information through third-party apps. The bill is anticipated to boost the country’s financial technology growth by allowing private fintech businesses to collaborate with banks and expand their commercial prospects. The newly signed bill is also intended to conform Ukrainian laws to the legal framework of the European Union, which would ultimately allow the country’s payment system to be integrated with the EU’s, according to the statement. The legislation is based on current requirements and incorporates European regulatory standards, such as the Payments Service Directive 2 and the E-Money Directive.

As previously reported, the NBU has been studying the possibility of creating a digital currency for some years, citing the potential of a CBDC to boost public trust in the central bank and its financial services. The bank, on the other hand, remained worried about potential associated concerns such as its influence on financial stability and potential challenges to the traditional banking system. Ukraine’s Ministry of Digital Transformation partnered with the Stellar Development Foundation earlier this year to establish digital assets and a CBDC infrastructure plan.

Ritika Sharma

With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.