The Ukrainian government is moving forward with its plans for the digital currency of the central bank (CBDC), because the National Bank of Ukraine (NBU) is now officially authorized to issue digital currency.
The Central Bank of Ukraine now has official permission to issue digital currency
Ukrainian President Volodymyr Zelensky signed a law entitled On Payment Services, which, according to the announcement, officially allows the country’s central bank to issue the CBDC, the digital hryvnia.
The new law empowers the NBU to establish regulatory quarantines for testing payment services and tools based on new technologies. The new legislation also allows for close cooperation between the Ukrainian central bank and local startups in the payments market, taking into account private sector demand.
The law, which was originally approved by the Ukrainian parliament in late June, aims to provide the implementation of open banking, a procedure for sharing access and control over consumers’ financial information through third-party applications. The law is expected to stimulate the development of financial technologies in the country and allow private fintech companies to work with banks and have more business opportunities.
Among other things, the newly signed law is also intended to adapt Ukrainian legislation to the legal framework of the European Union, which would eventually enable the integration of the country’s payment system with the EU, the announcement states. The legislation is based on the latest requirements and takes into account the standards of European regulatory acts, including the Payment Services Directive and the Electronic Money Directive.
In the last few years, the NBU has been examining in detail the issuance of digital currency and talking about the potential of the CBDC to strengthen public confidence in the central bank and its financial services. However, the Bank remained largely concerned about potential related risks, such as its impact on financial stability and possible threats to the traditional banking system.
Earlier this year, the Ukrainian Ministry of Digital Transformation entered into a partnership with the Stellar Development Foundation, which is behind the cryptocurrency Stellar Lumen (XLM) to jointly develop a strategy for digital assets and CBDC infrastructure.