**Ukraine Considers Moving Away from the US Dollar**
In a move that could have significant implications for the global economy, Ukraine is considering ditching the US dollar as its benchmark currency and moving closer to the euro. This decision comes as the country undergoes accession negotiations with the European Union (EU) and faces threats of tariffs from the United States.
According to Reuters, National Bank Governor Andrii Pyshnyi cited several reasons for this potential shift, including the “strengthening of the EU’s role in ensuring our defense capabilities” and “greater volatility in global markets.” He also mentioned the “probability of global trade fragmentation,” which could be a reference to the ongoing trade tensions between the US and other countries.
This move is not without precedent. Some European countries that do not use the euro, such as Denmark, peg their currencies to the euro using the European exchange rate mechanism as part of the EU’s Economic and Monetary Union. This would mean that Ukraine’s hryvnia currency would be tied to the euro rather than the dollar.
The potential benefits of this move are significant. By linking its currency to the euro, Ukraine could gain access to a larger market and enjoy greater economic stability. Additionally, it would demonstrate the country’s commitment to European integration and its desire to join the EU.
**Ukraine’s Progress Towards EU Membership**
This decision also comes as Ukraine continues to make progress towards EU membership. In April, Prime Minister Denys Shmyhal said that the country had fulfilled 81% of its commitments made under the Association Agreement with the EU. He emphasized Ukraine’s ability to quickly and efficiently complete its accession negotiations.
The EU has also shown support for Ukraine’s bid to join the bloc. On April 1, European officials announced a €16.7 million program to support Ukraine’s accession to the EU. This program aims to deepen sectoral integration and open up new opportunities for cooperation between the two parties.
**What Does this Mean for Ukraine?**
While the potential benefits of linking the hryvnia to the euro are significant, it’s essential to note that this decision would be complex and require high-quality preparation. As Governor Pyshnyi noted, “this work is complex and requires high-quality, versatile preparation.”
In conclusion, Ukraine’s consideration of moving away from the US dollar and closer to the euro marks an important step towards European integration. By linking its currency to the euro, Ukraine could gain access to a larger market and enjoy greater economic stability. As the country continues to make progress towards EU membership, it’s likely that we’ll see more significant developments in this area.
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