Ukraine central bank ‘still working’ on blockchain-based cryptocurrency

The National Bank of Ukraine (NBU) is continuing with pilot plans to launch an electronic version of the national currency called the e-hryvnia.

Vesti Ukraine reports how the central bank is investigating whether a blockchain-based national cryptocurrency could aid the country’s financial woes, offer greater security and speed up transactions. The e-hryvnia would be exchangeable for local currency in a 1:1 ratio, thereby dampening inflation fears, and could be used to purchase all the same goods and services as the hryvnia.

An e-hryvnia would also reduce costs to the NBU for keeping cash and coins in circulation, it is thought, one of the drivers of India’s investigation into a state-backed cryptocurrency

“We are studying how an electronic hryvnia can supplement the payment landscape of Ukraine and contribute to an increase in the share of non-cash settlements,” a bank spokesman said. Demand for foreign currency has outstripped supply, while holdings of the hryvnia have dropped sharply, according to local economic reporting.

The EU approved a 1bn macro-financial loan to Ukraine in May to help the struggling country to pay its bills.

A new draft structure for future currency regulation, released on September 17th, lays out how the NBU plans to liberalise Ukrainian law. The main proposals will re-allow citizens to buy foreign currency online – but only up to UAH 150,000 ($5,300) per day – end government supervision on some export and import operations, as well as cancelling individual currency licences and replacing them electronic limits.

NBU Deputy Governer Oleh Churiy presented the changes to business leaders before declaring that the new laws would come into force on February 7th 2019. Churiy said the rule relaxation was intended to attract new business to the embattled state, but that further steps to loosen regulations would depend heavily on “favourable macroeconomic conditions”.

Ukraine’s GDP stands at approximately $113bn, according to the World Bank.

Domestic political tension and the ongoing crisis over the 2013 invasion and annexing of Crimea by Vladimir Putin still weighs heavily over the country’s economy. 10,500 people have been killed since the invasion. The US announced recent plans to support Ukraine with $250m in arms, anti-tank missiles, fighter jets and other military weaponry as Russia reportedly continues to keep 2,000 Kremlin-backed soldiers in the in the east of the country, as well as supplying arms to separatists.

Russia has previously been accused of driving the creation of the Venezuelan Petro cryptocurrency in a bid to weaken the dominance of the US dollar and other Western currencies.