DYNAMICS OF THE UKRAINIAN BANKING SYSTEM’S ATTRACTION AND USE OF CASH SURROGATES
Abstract
This study is devoted to the analysis of transformations in the use of monetary surrogates within the Ukrainian banking system from 2015 to 2023. Through an extensive examination of financial data, key factors driving the rising prevalence of electronic money and cryptocurrencies have been identified. This phenomenon unfolds against a backdrop of profound technological shifts and economic volatility, compounded by regulatory challenges. The findings underscore a strong interconnection between technological advancements, changes in consumer behavior, and the evolution of the regulatory framework. A notable increase in the volume of electronic money transactions, coupled with the significant expansion of the cryptocurrency market, points to a paradigm shift from traditional banking services towards novel financial instruments. Specifically, electronic money, cryptocurrencies, and digital tokens are emerging as prominent alternatives to conventional currency, offering users avenues for conducting transactions and preserving value amid economic instability. The research also provides an in-depth analysis of the regulatory hurdles confronting financial institutions and government agencies, particularly regarding adherence to anti-money laundering (AML) protocols and know-your-customer (KYC) regulations, alongside the imperative to safeguard consumer rights amid heightened cryptocurrency market volatility. Furthermore, this study addresses the potential long-term ramifications of the proliferation of monetary surrogates on Ukraine’s banking system, including shifts in conventional banking practices, potential risks to financial stability, and implications for monetary policy. Despite notable progress in the integration of new financial technologies, several unresolved challenges persist, particularly concerning the provision of adequate regulatory support for innovation while maintaining the stability of the financial system. In conclusion, this research offers a valuable contribution to the understanding of how technological development and socio-economic changes are reshaping financial systems in emerging economies, with a particular focus on Ukraine. The insights derived from this study may prove instrumental for policymakers and financial institutions as they navigate the evolving conditions and challenges of a rapidly transforming financial landscape.
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