Estonia is playing a leading role in the development of the digital euro, and Poland is considering the creation of a digital zloty. However, both countries lag behind Ukraine’s plans to create a digital hryvnia.
Earlier this year, Eesti Pank, Estonia’s central bank, conducted an experiment with the European Central Bank (ECB), as well as banks in Spain, Germany, Italy, Greece and the Netherlands, to facilitate blockchain-based digital euro payments.
The experiment found that the digital euro, based on the same blockchain technology as the world-famous Estonian e-government, can service up to 300,000 simultaneous payments per second, with money coming to recipients’ accounts in less than two seconds.
Luukas Ilves, Estonia’s former EU digital adviser and current strategy manager for Guardtime, a corporate and state-owned blockchain company, says such a grand project should not be expected to become a reality immediately.
“Patience is important for Estonia and other small eurozone countries. The process of creating the eurozone will be gradual, and the launch of the CBDC [digital currency of the Central Bank] will take four to five years. Non-eurozone countries have the opportunity to move faster, ”he said.
Taxation of the shadow economy
Two of the countries that seem to be proving it right are Poland and Ukraine: both have begun developing national CBDCs.
Marek Ditl, CEO of the Warsaw Stock Exchange, recently said that Poland is currently at a crossroads: either it joins the eurozone (and is working to create a digital euro), or develops its own digital zloty.
Dariusz Brzozowiec, a representative of Poland’s “additional currency”, Zielony, notes that the country’s national bank is one of 60 central banks around the world that have published a joint bulletin calling for the urgent introduction of the CBDC.
Brzozowiec also considers the introduction of digital currency “the only available solution” in the country’s struggle for taxation of the shadow economy, which, he said, could reach 20 percent.
Digital hryvnia of Ukraine
Ukraine is another emerging market in Europe that hopes to benefit from the entry of digital currency.
While the Estonian Bank Eesti Pank conducted a study on the digitization of the euro, the Ministry of Digital Transformation of Ukraine, together with other government agencies and the private sector, issued a roadmap detailing how to turn the country into a “leader in cryptocurrency integration”. digital currency by half of Ukrainians by 2024.
“The National Bank of Ukraine (NBU) began to open opportunities to issue its own digital currency – the electronic hryvnia – in late 2016. NBU experts analyzed international experience, studied legal aspects and macroeconomic effects, ”Oleksandr Borniakov, Deputy Minister of Digital Transformation of Ukraine, told Emerging Europe.
Bornyakov also explains how the electronic hryvnia can accelerate Ukraine’s economic development.
Following Brzozowiec’s words, Borniakov notes that “the electronic hryvnia will help reduce the shadow economy in the economy. This, in turn, will lead to an increase in tax revenues in all sectors. ”
He also says that countries that join earlier will have a clear advantage.
In June, the Ukrainian parliament passed a law on payment services aimed at regulating the NBU’s electronic hryvnia issue. On September 8, parliament passed a law on virtual assets, which legalizes and regulates cryptocurrency and other virtual assets.