From October, 25, 2019, in accordance with NBU Resolution No. 122, the National Bank of Ukraine increased tariffs on providing banks with large denomination banknotes. As the NBU declared, such innovations will stimulate banks to receive not only high denominations of banknotes. In turn, citizens and cashiers will have banknotes for exchange and issue when calculating. Such change in tariffs will certainly influence for increasing the monetary value for consumers and reducing the amount of cash in circulation.

Thus, the following tariffs are set for the amount of banknotes issued upon receipt of bank notes:

  • 1000 UAH – 0,3%;
  • 200 – 500 UAH – 0,25%;
  • 1-100 UAH – 0,2%.

Before the change in tariffs for cash backing of banks, the tariff was 0,2% of the amount of banknotes issued.

The main reason of adoption the increased tariffs is to promote to Ukrainians the transition to non-cash payments using payment cards. With the NBU changes, cash in circulation will be less, thus gradually increasing the government revenues. Such transition to, or increase in, non-cash payments will allow the tax service and banks to control the cash flow of legal entities and individuals.  Consequently, money laundering, bribery and tax evasion opportunities are reduced. In addition, in the future the transition to cashless payments will reduce the cost of issuing, updating, storing paper money.

Certainly, NBU Resolution No. 122 will facilitate the transition to non-cash payments and reduce the level of the shadow economy. However, it should be taking into consideration that most Ukrainians are afraid of falling victim to scams. According to data of cyber police, crimes related to payment card payments have become more common in Ukraine last year. In general, criminals have stolen UAH 670 million from bank customers, that is why Ukrainians are reluctant of using payment cards.

Kateryna Breduliak, senior associate, banking and finance, exclusively for The Ukrainian Journal of Business Law