Digital hryvnia (e-hryvnia): How the NBU's new currency will radically change the lending market

The NBU is preparing for a revolutionary experiment with electronic currency that will radically change the financial market. This will especially affect online lending, as the process of obtaining loans will become instant and automatic.

What is e-Hryvnia and when will Ukrainians be able to use it: NBU plans for 2025

Imagine money that knows what it can be spent on. The NBU is preparing to test the digital currency in 2025. The electronic Ukrainian hryvnia is a new financial instrument with revolutionary capabilities.

The e-hryvnia is the NBU's innovative money, a digital form of Ukraine's currency. Simply put, it is the same hryvnia, only in a virtual format. Unlike conventional electronic money on cards, the central bank's currency operates without intermediaries and is a direct obligation of the NBU.

The electronic hryvnia will be a supplement to cash and funds on accounts, not a substitute for them. Users will be able to choose which form of the national currency to pay with.

The goal of the introduction is to create a more efficient payment system, ensure financial stability, and strengthen Ukraine's monetary independence. Virtual currency may affect the country's economic security and the NBU's ability to maintain price stability.

The pilot project is planned to be based on DLT (Distributed Ledger Technology) in an open environment with real users. DLT is a distributed ledger system where data is stored on multiple computers simultaneously.

The potential application areas are impressive. From government payments with targeted use control to business process automation. The state will be able to pay out assistance that can be spent only on specific goods. Imagine subsidies that cannot be spent on alcohol or scholarships with restrictions on certain categories of goods.

Programmable money and instant loans: how the e-hryvnia will make getting an online loan to any card even faster and safer

The most interesting feature of the electronic hryvnia is its programmability. Virtual money can be programmable, meaning that payments are made automatically when certain conditions are met. This opens up new horizons for financial services.

Programmability is based on the principles of smart contracts, which are technological protocols that allow for the fulfillment of contract terms without human intervention. A smart contract is an electronic agreement that is executed independently and stored on the blockchain.

The revolution will primarily affect online lending. Today, an online loan to any card requires manual processing of applications and human intervention at every stage. Even the fastest MFIs take several minutes to make a decision.

With programmable electronic currency, the process will be instantaneous. The smart contract will automatically check credit history, assess solvency, and make a decision without human intervention. Lending terms will be written in the code of the money itself.

Imagine the situation: you apply for a loan, and virtual money analyzes your income, checks the regularity of receipts, assesses risks, and makes an instant decision. If the conditions are met, funds are automatically credited to your account.

Programmable money can independently deduct a portion of your salary to repay a loan, preventing you from incurring debt. This will reduce risks for lenders and allow them to offer more favorable terms to borrowers.

Security will also increase, as if the user loses access to the e-wallet, it can be restored through another provider. Unlike cash, the innovative currency allows you to regain access even after losing your password.

The technology will eliminate intermediaries from the lending process. Smart contracts mean faster and cheaper transactions, making loans more affordable.

Transparency of operations will become absolute, with all transactions recorded and subject to verification by regulatory authorities. This will protect borrowers from unscrupulous lenders and lenders from fraud.

The development of online lending may lead to the emergence of new financial products, such as microloans with an hourly rate, loans with dynamic terms, and automatic refinancing when the credit rating improves.

The range of services available online is constantly expanding. In Ukraine, a fairly large range of online communication between citizens is also accounted for by various assistance options. This saves time, but on the other hand, it provides additional opportunities for scammers. Unfortunately, cases of stealing money from bank cards or unauthorized payment for goods are quite common. Intent wrote about how to protect yourself from bank card fraud. You can find the algorithm of actions if the trouble happened in this material of Intent.

Олена Болган