As countries move towards the adoption of digital currencies, the National Bank of Ukraine (NBU) is now formally permitted to issue a digital currency.
According to a Thursday release, Ukrainian President Volodymyr Zelenskyy has signed the law 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 release, the new legislation also mandates tight collaboration between the Ukrainian central bank and local payment companies, taking into account private sector demand.
The law “On Payment Services,” which was first adopted by the Ukrainian parliament in late June, aims to facilitate the adoption of open banking, which is the practice of sharing access and control over customer financial information through third-party applications.
The bill is designed to boost the country’s financial technology growth by allowing private fintech companies to collaborate with banks and expand their business options.
According to the release, the newly signed bill is intended to conform Ukrainian laws to the legal framework of the European Union, which would eventually allow the country’s payment system to be integrated with the EU’s.
The legislation is based on current requirements and incorporates European regulatory standards, such as the Payments Service Directive 2 and the E-Money Directive.
The NBU has been investigating into launching a digital currency for several years, as previously reported, highlighting CBDC’s potential to increase public confidence in the central bank and its financial services.
The bank, on the other hand, remained concerned about potential linked concerns such as CBDC’s impact on financial stability and potential threats to the traditional banking system.
Ukraine’s Ministry of Digital Transformation partnered with the Stellar Development Foundation earlier this year to build a digital assets and CBDC infrastructure strategy.
