Conferences on CBDC

Market survey

(law changes...)

Fedorov wants his salary in CBDC

Stellar experiment

Mikhail Fedorov says he wants to make his country the world's leading jurisdiction for virtual currency after a successful wartime fundraising campaign.

Problem

• the consequences of the 2008 economic crisis led to the lack of trust in traditional banking systems.
• as a response to the rapid growth of private currencies and cryptocurrencies -> the attempts of central banks to regain full control over their state's monetary policy

Solution

• CBDC may be a universal payment instrument in a decentralised financial infrastructure and serve as a useful tool to keep state's financial system in order
• CBDC is characterized by its reliability, since CBDC is issued by central banks: transactions require fewer intermediate steps or even eliminate the interbank layer completely when transferring funds through a digital system
• lower costs and faster transaction processing
• may be easier to trace helping to prevent money laundering
• privacy and anonymity remain one of the key factors for clients

Product / Market fit

The Law of Ukraine "On Payment Services", adopted in 2021 and effective from 1 August 2022, introduced the concept of "digital money of the National Bank of Ukraine" into Ukrainian legislation. The NBU digital currency is considered as a legally permitted means of making certain kinds of payments in Ukraine for individuals and businesses.

Benefits

• E-hryvnia is a logical next step in Ukraine's strategy to digitise its economy
• further reinforce Ukraine's progress with the digitalisation of public services and the Diia City special regime for tech companies
• expand the share of cashless payments, reduce transaction costs, and increase confidence in Ukraine's national currency.
• digital money transfers had enabled people worldwide to send money to Ukrainians: crypto fundraising by Ukraine early in the war succeeded in raising $178 million in clothing, vehicles and other equipment for soldiers, without falling afoul of capital controls.

Costs

Feasibility (by steps):

1. 2016 NBU started developing its own digital currency
2. 2017 announcement of CBDC project in Ukraine
3. 2018 2-month pilot project E-hryvnia (issued a limited amount of E-hryvnias and made payments using E-hryvnia)
4. 2019 NBU prepared an analytical note https://bank.gov.ua/admin_uploads/article/Analytical Report on E-hryvnia.pdf?v=4 on the results of its pilot project "E-hryvnia"
5. 2021 a survey of financial market experts on the demand for e-hryvnia https://bank.gov.ua/admin_uploads/article/E-hryvnya_2021.pdf?v=4 global experience in developing digital currencies by central banks, and the NBU's own research. NBU concluded that E-hryvnia could be an alternative to existing instruments for retail payments, BUT E-hryvnia could be a so-called "disruptive technology" for the Ukrainian payment market ecosystem, and significantly affect the existing roles of the participants.
6. 2022, October: the Ukrainian Intellectual Property Institute (UKRPATENT) registered the “е-гривня” and “e-hryvnia” trademarks owned by the National Bank.
7. 2022, November: the draft concept for E-hryvnia was announced https://bank.gov.ua/ua/news/all/natsionalniy-bank-predstaviv-uchasnikam-platijnogo-rinku-ta-rinku-virtualnih-aktiviv--proyekt-kontseptsiyi-e-grivni it envisages that E-hryvnia will be used for retail cashless payments, virtual assets transactions and cross-border payments
8. 2023: the concept and models for introducing the E-hryvnia are still being discussed (NBU promised to take into account the needs of market participants and clients).

Obstacles

• finding the right balance between freedoms for users and security
• full implementation of E-hryvnia is possible only after significant modernisation of Ukraine's payment infrastructure

Scaling

The NBU is currently considering and working on the following possible uses for the e-hryvnia, which will determine its design and main characteristics:

• for retail cashless payments with possible "programmable" money functionality: to make targeted social payments, reduce public spending on administration and control of the targeted use of funds, and use smart contract technology to program various settlement logics depending on the occurrence of certain circumstances and facts;
• to be used in the area related to the circulation of virtual assets (e.g., for the exchange, securing of issuance, and other transactions with virtual assets). The e-hryvnia can become one of the key elements of high-quality infrastructure development for the virtual asset market in Ukraine;
• to enable cross-border payments: it will enable faster, cheaper and more transparent cross-border payments.

Main references:

https://cbdctracker.org/currency/ukraine-e-hryvnia

https://bank.gov.ua/ua/payments/e-hryvnia

https://bank.gov.ua/admin_uploads/article/Analytical Report on E-hryvnia.pdf?v=4

https://bank.gov.ua/admin_uploads/article/E-hryvnya_2021.pdf?v=4

Експеримент Ізраїльського банку з ЦБДК з частковим забезпеченням конфіденційності:

Висновок: Другий етап експерименту вивчав можливість здійснення цифрових платежів в диджітал-шекелях з обмеженим рівнем конфіденційності відповідно до правил, які встановлюють політики. Спроба створити рішення для цього питання в експериментальному середовищі показала, що

1) складно використовувати ключі шифрування в розподіленій архітектурі, і тому необхідно працювати з іншими механізмами, включаючи технології нульового доказу знань.

2) можливо впровадити політику, за якою періодичний бюджет "приватних" диджітал-шекелів може бути виділений кожному клієнту в мережі диджітал-шекеля, який клієнт може використовувати для оплати без зберігання будь-якої документації щодо оплати.

Експеримент і обговорення, які відбулися після нього, додали акценту на те, що незважаючи на технологічну можливість, є багато питань політики, які все ще потрібно вивчити і обговорити. Наприклад, який є "правильний" приватний бюджет, і чи чи повинен він бути виділеним на кожний тип гаманця (приватний, корпоративний і так далі), чи це може створити економічні стимули для зловживання "приватними" шекелями і так далі.

https://research.vmware.com/projects/digital-cash-and-central-bank-digital-currencies