CHALLENGES OF REINTEGRATION CASH FOREIGN CURRENCY INTO THE MONETARY-CREDIT SYSTEM OF UKRAINE

Abstract

The article addresses the scientific problem of reintegrating substantial volumes of cash foreign currency held outside Ukraine's banking system into the monetary and credit market. This problem is examined in the context of Ukraine's wartime economy and its European integration process. The research hypothesis posits the necessity of theoretical analysis and substantiation of mechanisms for reintegrating thesaurised foreign currency assets of individuals as personal investors into Ukraine's monetary and credit system as a priority of monetary and fiscal-budgetary policy. The theoretical foundation of the authors' approach rests on the substantiation of the following interconnections: currency substitution — the partial assumption of monetary functions by foreign currency; asset substitution — portfolio diversification in favour of foreign currency as a store of value; and thesaurisation — the accumulation of cash at zero velocity of circulation, which precludes its participation in the credit multiplier mechanism. Four groups of determinants driving the accumulation of off-bank currency are analysed: the wartime regulatory architecture (NBU restrictions pursuant to Resolution No. 18 of 24 February 2022); economic and monetary factors (the inflation peak of 26.6% in October 2022); institutional factors and the precautionary saving motive; and stablecoins (primarily USDT) as a parallel channel for value transfer. Four reintegration mechanisms are proposed: foreign-currency domestic government bonds (FX OVDPs) as the primary mobilisation instrument; extension of the deposit guarantee system to the EU standard (EUR 100,000 in accordance with Directive 2014/49/EU); a one-time voluntary declaration (capital amnesty); and development of the securities market — corporate bonds for the defence-industrial complex and collective investment instruments (CII) for financing energy infrastructure, accessible to personal investors. Implementation of the proposed mechanisms is capable of restoring the effectiveness of monetary transmission and providing domestic financing for reconstruction without increasing external debt.