The Ukrainian government is making progress with its Central Bank (CBDC) digital currency plans as the National Bank of Ukraine (NBU) is now officially authorized to issue a digital currency.
Ukrainian President Volodymyr Zelenskyy has signed the law entitled “On Payment Services,” which officially allows the country’s central bank to issue a CBDC, the digital hryvnia, according to an announcement on Thursday.
The new law empowers the NBU to set up regulatory sandboxes for testing payment services and instruments based on new technologies. The new legislation also requires the Ukrainian Central Bank to work closely with local startups in the payments market, taking into account private sector demand, the announcement said.
The Law “On Payment Services”, originally passed by the Ukrainian Parliament in late June, aims to implement open banking, the practice of shared access and control of consumers’ financial information through third-party applications. The law aims to stimulate the development of financial technologies in the country and allow private fintech companies to work with banks and get more business opportunities.
According to the announcement, the newly signed law is also intended to adapt Ukrainian legislation to the legal framework of the European Union, which would ultimately enable the country’s payment system to be integrated with that of the EU. The legislation is based on modern requirements and takes into account the standards of European regulatory laws, including the Payment Services Directive 2 and the E-Money Directive.
Related: The Ukrainian e-bank plans to offer Bitcoin trading in July
As previously reported, in recent years the NBU has dealt intensively with the issue of a digital currency and demonstrated the potential of the CBDC to increase public confidence in the central bank and its financial services. However, the bank remained largely concerned about potential related risks, such as the impact of the CBDC on financial stability and possible threats to the traditional banking system.
Earlier this year, the Ukrainian Ministry of Digital Transformation partnered with the Stellar Development Foundation to jointly develop a strategy for digital assets and the CBDC infrastructure.