Will Ukraine abandon the hryvnia and switch to the euro? Will people "change money" after the exchange rate is unpegged from the dollar?

Ukraine will not switch from the dollar to the euro as its exchange rate in the near future. Under favorable circumstances, this should be expected no earlier than in 3 years. At the same time, there is no question of abandoning the hryvnia, so there is no point in buying euros to stock up on currency.

Globus Bank CEO Serhiy Mamedov said this in a commentary to the media. He noted that a number of conditions must be met for the transition. Among them:

• The number of export-import transactions in euros should significantly outweigh similar figures in other currencies, in particular in dollars.
• Ukraine's movement to the EU should not be only declarative, but should also include maximum integration of all state processes, as well as the economy and legislation, into the norms and principles of the European community.
• Peace must come to Ukraine with clear security guarantees.

"This will be a completely natural and economically balanced process, which citizens will learn about in advance: at the stage of budget planning for the next year. At the moment, there will be no abandonment of the US dollar as the exchange rate currency. However, Ukraine declares a strategic goal, a vector of development, the implementation of which coincides with the strategic goal of becoming a full member of the European Union," Mamedov said.

Ukraine will not give up the hryvnia

At the same time, he noted, there is no question of abandoning the hryvnia and switching to the euro. Therefore, it is not worth buying up currency in the hope of stockpiling it before the changes.

"We are definitely not talking about giving up the hryvnia. So people should not be nervous about buying euros," the banker explained.

For their part, analysts at the Ministry of Finance have previously noted that despite the National Bank's intention to untie the hryvnia from the dollar and start calculating its exchange rate against the euro, there are no plans to switch to the euro. Neither in the near nor in the distant future. This is because, among other things, Ukraine would lose the ability to conduct its own interest rate policy. In addition, the abandonment of the hryvnia will make it impossible to implement an independent exchange rate policy.

It is also noted that there is still no consensus on how effective such a step is for countries with unstable democracies and underdeveloped markets. This includes Ukraine.

"Crises [in such countries] often have an internal political nature. And the standard method of absorbing currency and financial shocks caused by a crisis is to devalue the national currency, which cannot be done after joining the euro zone," the authors explain.

What the NBU says about the "transition" to the euro

Earlier, First Deputy Governor of the NBU Kateryna Rozhkova said that there would be no abrupt transition from the dollar to the euro - everything would happen slowly and unnoticed. She also emphasized that now is not the best time to untie the hryvnia from the dollar for the sake of switching to the euro. After all, the country is at war.

According to her, the transition from the dollar to the euro will benefit the Ukrainian economy. In particular, Rozhkova noted, in the context of Ukraine's aspirations to join the European Union.

However, she emphasized that there is no specific timeline for the transition. "When and how (it will happen - Ed.) is another question," Rozhkova summarized.

As OBOZ.UA previously reported, Ukraine's accession to the Single Euro Payments Area (SEPA) will not happen overnight - it will take some time. The fact is that now the country is only in the process of implementing legislation in line with European legal norms governing the banking sector, including interstate transfers.

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