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Cash and Cash Infrastructure in Ukraine

Categories : Cash and Crises, Cash generates security, Cash is a contingency and fall-back solution
February 23, 2022
Tags : Access to cash, Cash and Crises, Store of value, Trust, Ukraine
Currency in circulation in Ukraine grew 31.4% in 2020, during the Covid-19 pandemic. Cash withdrawals increased in 2021, alongside Russia's military buildup. A recent cyberattack spread fake rumors about ATM malfunctions.
Manuel A. Bautista-González

Ph.D. in U.S. History, Columbia University in the City of New York

Post-Doctoral Researcher in Global Correspondent Banking, 1870-2000 – South America, University of Oxford

This post is also available in: Spanish

A Cyberattack Targeted Banks Spreading Rumors about ATM Malfunctions

On February 12, CashEssentials warned that tensions between Russia and the West increased the likelihood of a cyberattack against Ukraine’s computer systems, including payment networks. A few days later (February 15), a cyberattack targeted the websites of the Ukrainian army, the Defense Ministry, and the two largest banks in the country, the state-owned PrivatBank and Oschadbank.

The attack disrupted banks’ mobile phone applications and online payments. Fake SMS messages claimed banks had suspended operations and ATMs had stopped working. Customers rushed to withdraw cash and check their banking applications, saturating them. Some PrivatBank ATMs were affected, but not all terminals were shut down. Customers posted tweets saying they could still withdraw cash and use cards. A few customers reported their bank balances had been drained.

Oschadbank confirmed the cyberattack had slowed down its systems. PrivatBank denied it had been targeted at first, asking its “clients and all citizens of Ukraine to remain calm and be guided in their decisions by information from official and verified sources.” Later, “Privat[Bank] assure[d] that there is no threat to depositors’ funds,” according to Ukraine’s Centre for Strategic Communications and Information Security, part of the Ministry of Culture and Information Policy.

Ukrainian and U.S. officers blamed Moscow.

On February 22, another cyberattack disrupted the websites of government agencies and several banks, including PrivatBank. “At about 4 p.m., another mass DDoS attack on our state began. We have relevant data from a number of banks,” said Mykhailo Fedorov, Ukraine’s minister of digital transformation. A day after, the Slovakian cybersecurity firm ESET Research Labs announced it had detected a piece of destructive malware hit hundreds of computers in Ukraine.

The United States, the United Kingdom and the European Union had imposed some sanctions on Russian banks.

Cash in Circulation and ATMs

Ukrainian hryvnias (UAH) in circulation grew between 2002 and 2019 and expanded even more rapidly during the Covid-19 pandemic, as Graph 1 shows. Data from the National Bank of Ukraine (NBU) shows that cash in circulation grew 31.4% in 2020.

At the onset of the pandemic, Ukrainians withdrew cash en masse from banks. The NBU  provided additional quarantined cash to banks, helping preserve customers’ confidence. Currency in circulation grew 4.35% in March 2020 and 6.95% in April 2020.

According to the NBU, as of January 1, 2022, cash in circulation reached UAH627.6 billion, with UAH622.6 billion in 2.95 billion banknotes and UAH4.8 billion in 13.99 billion coins. There were 71 banknotes and 162 coins per capita in Ukraine. The UAH20 banknote had the largest number of pieces in circulation, at 25.1% of banknotes, and the UAH1,000 banknote had the smallest number, at 3% of banknotes.

Graph 1. Ukraine: Currency in Circulation and ATMs, 2002-2021

Note: Figures do not include December 2021. Source: NBU Payment Statistics (2002-2019, 2020-2021); Monetary Statistics (2002-2021); CashEssentials.

The number of ATMs in Ukraine grew at double-digit rates between 2002 and 2009 (see Graph 1). Their number decelerated between 2010 and 2014. The number of cash dispensers declined markedly through 2016, recovered between 2017 and 2018, and slowly declined through 2021. ATM figures include regular ATMs, cash-in ATMs, and self-service kiosks. Self-service kiosks (SSK) allow Ukrainians to deposit funds into their bank accounts, top-up their mobile accounts, and pay for utilities (see NBU 2019: 15).

Cash Withdrawals in Ukraine: 2002-2014 

Cash withdrawals grew in value and volume from 2002 to 2008, the year of the global financial crisis (see Graph 2). They declined during the Great Recession and then rose through 2013. In 2014, cash withdrawals declined, but their decrease by value (-6%) was lower than by volume (-10%).

During the Maidan revolution of February 2014, Ukrainians demanded cash in excess out of precaution amid political unrest. Banks had to restrict cash withdrawals in hryvnias (UAH800-2,500) and U.S. dollars ($500-$1,500). “I saw everybody was withdrawing [cash], so I’m withdrawing too. I don’t know,” said a man in eastern Ukraine waiting in line at an ATM (New York Times video, minute 0:44).3

Graph 2. Ukraine: Cash Withdrawals by Value and Volume, 2002-2021

Note: Figures do not include December 2021. Source: NBU Payment Statistics (2002-2019, 2020-2021); CashEssentials.

Payments in Russian-Occupied Territories

Russia confiscated banks’ buildings, equipment, and cash shortly after occupying territories in Eastern Ukraine. Banks closed, and ATMs shut down. Visa and MasterCard cards stopped working due to Western sanctions in territories annexed by Russia and those controlled by pro-Russian rebels.

Cash Withdrawals during the Ukrainian-Russian War (2014-) and the Covid-19 Pandemic (2021-)

From 2015 onwards, cash withdrawals grew and peaked in 2019 (see Graph 2). During the Covid-19 pandemic, cash withdrawals by volume declined in 2020 (-12%) and 2021 (-10%). However, by value, cash withdrawals declined very little in 2020 (-2%) and increased in 2021 (2% through November). This means that although Ukrainians might be using ATMs less, they still withdraw cash in nearly the same or even higher amounts as before the pandemic.

Last year’s increase in cash withdrawals by value coincided with Russia’s military buildup around Ukraine since October 2021. Ukrainians are holding on to more cash due to uncertainty about a potential military conflict.

This post is also available in: Spanish

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