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Cash and Ukraine’s Plight

Categories : Cash and Crises, Cash does not require a technology infrastructure, Cash generates security, Cash is easy to use
February 20, 2023
Tags : Cash, Cash and Crises, Digital payments, Humanitarian, Ukraine
Cash helps civilians and refugees best during the Russian invasion of Ukraine.
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 – Mexico and South America, University of Oxford

This post is also available in: Spanish

Refugees and Relocated Workers Prefer Holding Cash in Their Hands

In the first months after the Russian invasion, Ukrainian refugees in the European Union faced exorbitant commissions when attempting to exchange their funds for local cash. In April, the Council of the European Union recommended that E.U. member states allow refugees to convert up to 10,000 hryvnias ($272.11) without charges at the official exchange rates of the National Bank of Ukraine (NBU).

Since then, the Narodowy Bank Polski, the Deutsche Bundesbank, the National Bank of Belgium, the Sveriges Riksbank, De Nederlandsche Bank, the Bank of Italy, the Swiss National Bank, the Central Bank of Malta, and the Latvijas Bank signed agreements with the NBU. Most had ended or are coming to an end, as “such transactions have been declining in amount and number compared to when they first occurred,” said the NBU.

Cash has also proven valuable for companies relocating operations outside of Russia. In December 2021, Natalie Kaminski (the owner and CEO of software developer JetRockets) started creating cash reserves for salaries in case SWIFT payments stopped working. After the invasion, Kaminski relocated two-thirds of her staff from Tver (Russia) to Batumi (Georgia). Kaminski collected $1,000 in cash from different ATMs to take to the company’s new office.

Multipurpose Cash Assistance (MPC) Remains Critical

“Our fridge is empty, so we need to buy food. Some people have tried to give us food, but I feel ashamed. I want to buy it myself.” – Rozalia, Ukrainian refugee in Poland

Humanitarian and non-governmental organizations distribute cash assistance in Ukraine and other countries, as this relief is most effective during crises.

In Ukraine, the United Nations High Commissioner for Refugees (UNHCR)  distributes cash grants to families at branches of the country’s postal services. In Poland and Moldova, UNHCR officers disburse funds on ATM cards. To distribute micro-grants in Ukraine, Boston-based nonprofit Cash For Refugees (CFR) uses PayPal, credit cards, bank transfers, and good old ATM withdrawals.

Digital Alternatives?

International donors have sought alternatives to traditional relief charities to support Ukraine.

Cash Remains the Most Efficient Way to Help Ukraine

While these alternatives might appeal to donors in developed countries, Ukrainians might not use these donations due to the war’s destruction.

Those with dire needs and the digitally excluded might not get help.

This post is also available in: Spanish