Since the beginning of the Russian invasion of Ukraine, millions of Ukrainians have arrived in the European Union. Many have emptied their bank accounts before fleeing. Refugees pay exorbitant rates to exchangeThe Eurosystem comprises the European Central Bank and the national central banks of those countries that have adopted the euro. More their moneyFrom the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation has taken on very varied forms until the appearance of metal coins. The banknote, a typical representati... More, up to 90% higher than before the war, or face flat refusals. “Crossing the border from Ukraine into Poland at Zosin, there was a lot of help on offer — free food, free diapers,” one Ukrainian refugee told POLITICO. “But nobody [is] willing to exchange cashMoney in physical form such as banknotes and coins. More.” The National Bank of Ukraine (NBU) has suspended the exchange of hryvnias (UAH) into foreign currencyThe money used in a particular country at a particular time, like dollar, yen, euro, etc., consisting of banknotes and coins, that does not require endorsement as a medium of exchange. More to protect the country’s foreign exchange reserves.
One month after the launch of the attack, the Financial Times reported significant increases in cash in circulationThe value (or number of units) of the banknotes and coins in circulation within an economy. Cash in circulation is included in the M1 monetary aggregate and comprises only the banknotes and coins in circulation outside the Monetary Financial Institutions (MFI), as stated in the consolidated balance sheet of the MFIs, which means that the cash issued and held by the MFIs has been subtracted (“cash reserves”). Cash in circulation does not include the balance of the central bank’s own banknot... More in neighbouring countries, including Poland, Lithuania, Estonia, Latvia, Finland, Slovakia, and Hungary. Swedbank’s head of forecasting Andreas Wallstrom told the F.T. that cash withdrawals had reached the highest levels in three years.
On March 18, the National Bank of Poland (NBP) and its Ukrainian counterpart signed an agreement to enable each adult refugee to exchange up to UAH10,000 at the official exchange rateThe rate at which one currency will be exchanged for another. More.
E.U. member states, the European Commission, and the ECB have been exploring how to support the Ukrainian central bank since the beginning of the crisis. On 19 April 2022, the Council of the European Union recommended that the Member States of the European Union should establish a national scheme to facilitate the conversion of hryvnia banknotes into its national currency by displaced persons, without charges, for an amount of UAH10,000 (€324.66) per person, at the official exchange rate published by the NBU. The NBU fixed the foreign exchange rates on 24 February under the martial law regime. As of May 5, €1 is worth UAH30.801.
The Recommendation encourages the Member States to make the best use of a network of credit institutions to implement the exchange scheme. It adds that Member States should envisage agreeing with the NBU on the modalities for future exchange of hryvnia banknotes.
Ukraine experienced a run for cash following the Russian invasion. Under martial law, the NBU lifted requirements to provide source verificationChecking the authenticity. More documents from banks, namely about cash withdrawals from own accounts and purchase of investment metals when taking currency or valuables abroad. Before the decision, individuals had to provide such documents when taking abroad currency valuables for €10,000 (in equivalent).