Digital money: A new era of finance

Abstract

In modern conditions, the digital economy is serviced outside the banking system, through decentralized payment instruments. At the same time, cryptocurrencies are legally outside the legal framework in most countries, and without paying taxes. In this context, it is quite relevant that the central bank should have its digital currency, which will be on its balance sheet, and will allow the digital economy to return to the legal field, provide additional guarantees to crypto investors and citizens to protect their funds and savings at the state level. The central bank will conduct settlements in digital hryvnia, similar to the electronic payment system already in operation at the National Bank of Ukraine, and it will conduct settlements between banks and their customers. The relevance of this study is also due to the introduction of the term ‘digital money of the National Bank of Ukraine’ into the general legal framework of Ukraine by the Law of Ukraine No. 1591-IX ‘On Payment Services’, which came into force on 1 August 2022. It is also expected that the Law of Ukraine ‘On Virtual Assets’ No. 2074-IX dated 17.02.2022 will be adopted, which will regulate legal relations arising in connection with the circulation of virtual assets in Ukraine, define the rights and obligations of participants in the virtual assets market, and the principles of state policy in the field of virtual assets circulation. As part of the preparation of this article, an expert interview was conducted with Ukrainian experts from the Association of Ukrainian Banks to identify and study new opportunities and their practical implementation on a scientific level and to understand them in form and substance, their impact on the digital economy and digital society- through the prism of experience gained, taking into account the new standards for fiat money. Given that Ukraine is currently experiencing active military operations and only a part of the business community is operating, particularly in Central and Western Ukraine, our goal was to find out whether Ukrainian banks are ready to introduce a digital currency in the country and how effective and relevant it can be for the country. This experience may also be of interest to other countries.