The Council of the National Bank of Ukraine approved recommendations as to the improvement of the payment system and the problem of central banks digital currencies and blockchain payment systems

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On April 26, the Council of the National Bank of Ukraine (hereinafter — the Council) held a meeting, addressing the issues of the payment system improvement, the problem of digital currencies of central banks, and blockchain payment systems. Following the discussion, the Council approved relevant recommendations of the Cabinet of Ministers of Ukraine and the Board of the National Bank of Ukraine.

The meeting also covered the results of the 2019 internal audit in the structural units of the National Bank of Ukraine.

On the basis and within the powers defined in paragraph 13 of the first part of Article 9 of the Law of Ukraine “On the National Bank of Ukraine” the Council decided as follows.

Recommend to the Board of the National Bank on:

1. The Central Bank digital currency (E-hryvnia):

• Inform the Council on decisions and further actions on the analysis, preparation or introduction of e-hryvnia as the digital currency of the Central Bank.
• Consider that the scale and technical component (testing of technology and not product) of the E-hryvnia project do not allow to fully assess the losses and benefits of E-hryvnia introduction as a digital currency of the Central Bank. Should the decision to introduce E-hryvnia be made, conduct a larger project to assess systemic effects in the field of monetary policy, financial stability, banking business models transformation, behavior of payment market participants, technical solutions reliability.
• Start the potential consumer motivation and E-hryvnia demand research.
• Analyze the E-hryvnia impact on banks activities and consequences for monetary policy and financial stability.
• Give consideration to the feasibility of implementing the alternative models of digital currencies of central banks in Ukraine, including analysis and solutions testing that are already being used (tested) by other central banks worldwide.

2. The National Bank Electronic payment systems:

• Ensure increased efficiency of the electronic payment system of the National Bank of Ukraine by expanding the rules of its operation and functionality.
• Initiate communications with the National Commission on Securities and Stock Market and the National Depository of Ukraine in order to implement the international ISO 20022 standard (Financial Services — Universal Notification Scheme for the Financial Industry).

3. Payment systems oversight:

• Ensure comprehensive assessment of financial market infrastructures for compliance with PFMI international standards (Principles for Financial Market Infrastructures) published by the Bank for International Settlements and the International Organization of Securities Commissions and preparation of legislative amendments with a view to strengthening the National Bank of Ukraine's powers as to oversight of the key market infrastructures.
• Take effective measures as to the implementation of the EU directives and international standards governing the operation of the payment market infrastructure and oversight.
• Strengthen efforts on preparation and signing of the memorandum of cooperation between the National Bank of Ukraine and the National Commission on Securities and Stock Market on oversight and supervision of securities settlement systems, central depository, central counterparty, and trading repository.

4. PROSTIR national payment system:

• Analyze the economic feasibility of supporting PROSTIR national payment system as well as take effective measures to improve the efficiency of its work, including more active involvement of the PROSTIR NPS in the service of pensions and other state social benefits, particularly in remote areas.
• Promote the spread of innovative tools for non-cash payments on the platform of the PROSTIR NPS, in particular, implement a technical solution for PROSTIR NPS in order to enable the use of GooglePay or ApplePay to strengthen system competitiveness and promote PROSTIR among the population.

Recommend to the Cabinet of Ministers of Ukraine and the National Bank of Ukraine:

1. Organize support for the elderly in mastering the skills of non-cash payment, namely, in the form of informing about the possibilities, rules and security of payments, promoting the establishment of and training in the use of specialized payment programs.
2. Ensure the possibility of non-cash payments by consumers who are in isolation and lack access to digital devices (by delivering mobile terminals, promoting the equipment of courier services and social services with mobile applications for processing and learning to use payment cards, expanding the network of POS-terminals for non-cash and cash payments).
3. Develop and integrate specialized programs for cashless payments with payment networks of one or more state-owned banks, adapted for use by the elderly if they have a smartphone or Internet access.
4. Foster non-cash settlements with employees of state institutions, as well as payments to the state and enterprises providing consumer services to the population.
5. Execute gradual transfer of all recipients of pension and other state social benefits into non-cash form by issuing payment cards of national payment systems.
6. Contribute to the improvement of the system of remote client identification and verification as well as the development of tools that will spread the practice of remote contract signing in the financial sector.
7. Develop a set of measures aimed at installing payment terminals in commercial enterprises in rural areas, regardless of ownership and organizational subordination, as well as in all post offices located in rural areas, which will increase the availability of banking services for local residents.
8. Develop and implement measures to introduce the e-residency model enabling citizens of other countries to remotely conduct business in Ukraine.

Other agenda items were also covered during the meeting.

The meeting was attended by the members of the Council and the Board of the National Bank of Ukraine.