CBDC In Ukraine: Development Perspectives Of Digital Currency
In February 2020, the National Bank of Ukraine has conducted a meetup related to national digital currencies, with an aim to gather the most prominent FinTech specialists as well as traditional bankers to exchange experience and discuss opportunities related to the development of electronic hryvnia.
The event was attended by representatives of the National Banks of Japan, Canada, Finland, Netherlands, Belarus, Lithuania, Uruguay, South Africa, Poland, representatives of the World Bank and the technology community.
Participants have presented their pilot CBDC projects and discussed future perspectives, as well as problems that they stumbled upon.
However, the most frequently asked question, literally permeating the atmosphere of the conference, was the question “Why?”. What’s new and unique a new form of money can offer to society? What dangers and positive perspectives it opens to the world? Answers to these questions were sought by panelists: ‘CBDC in the realities of the Ukrainian payment landscape’. Representatives from different industries and fields with deep experience in FinTech took part in the discussion, articulating their role in CBDC development and closely-related professional fields.
During the discussion, it became evident for everyone that national digital currency cannot play a role of irreplaceable alternative to fiat, and is unlikely to increase financial inclusion for people ignoring scientific progress. This category of people or fiat adepts won’t ever leave a leather wallet in favor of hardware, and a familiar cash desk to a mobile application. It can definitely be said, that the role of CBDC is significant, but lies much farther than just a simple ‘fiat upgrade’.
The founder of Attic Lab and Tezos Ukraine co-founder Sergey Vasylchuk has expressed his opinion, stating that: ‘CBDC may become one of the most significant technological breakthroughs, that will refresh our stereotypes regarding traditional money. There’s no need to treat this technology in the old way, but everyone has to find completely new usage of it.
CBDC is a good addition to fiat and electronic money and can solve a wide range of problems. Digital currency is designed to expand the horizons of the very concept of “money”, giving them additional features.CBDC as the concept itself allows creating a new generation of financial instruments, that pave the way for businesses to new activities related to exchanges, crowdfunding platforms, investing and venture capitals, international business-incubators, participation in mutual projects and investments attraction. These and many other benefits will be offered to Ukrainian businesses through the CBDC. In case the government offers CBDC as the new financial instrument, it improves its business model and allows attracting larger investments’.
But there’s no need to forget, that the second aspect that pushes forward the CBDC development is the explosively growing cryptocurrency industry. Today, in parallel with the real legal and regulated world, there is a certain virtual reality that is poorly regulated or not at all. The funnel of this crypto reality every day draws in new resources, minds, and souls of law-abiding citizens.
It leads us to a question — What causes this popularity of completely different financial world, and what security it guarantees today? The attractiveness of cryptocurrencies lies in its disrupting functionality that allows borderless and fast money transfers, and many other benefits that businesses want to have. In the case of the unstable market situation, different stablecoins pegged 1:1 against national currencies will play a role of a lifeboat. But how stablecoins are backed? Won’t it lead to worldwide chaos? — And isn’t it a nearly perfect soil for stable and fully backed national digital currency?
And yet, what superpowers we would not endow with CBDC, anyway it is still money, which means that they face a number of serious challenges to be technologically resilient, financially stable while meeting all AML / KYC requirements, and of course, be popular among people. Mentioned characteristics require an impeccable technical platform capable of providing high-level functionality and security.
By the end of the conference, Ryan Lackey CSO and member of the Council of the Tezos Foundation has participated in ‘CBDC Technical Architecture’ panel discussion, presenting Tezos platform which was created specifically for FinTech products
Ryan has presented technical capabilities of the open-source Tezos Platform, as well as its resources and applications, that are actively supported by researchers and developers.
Tezos blockchain is highly flexible and can be easily modified for the needs of companies, as well as financial institutions. It is armed with formal verification functionality of the smart-contracts that ensures high decentralization and security of the network while saving many resources. Tezos community has expressed its willingness to support the future of CBDC in Ukraine through partners in Tezos Ukraine.
And the only question that remains open is the interest and further actions of the National Bank of Ukraine and the Ministry of Digital Transformation aimed at CBDC development. Considering the complexity of this solution, it’s not a place for bare enthusiasm, because such serious financial improvement requires professional knowledge, political power, the desire for positive changes, and patriotism.
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