Ukraine Economic Bailout Offers Bitcoin Opportunity

     For many countries around the world, these are tough times as their economies fall apart. Ukraine is one of those countries, as inflation hit a record high later this year — 44%. With an increase of nearly 25% over last year, anyone can see that Ukraine’s economy needs a bailout. At the same time, the Central Bank of Ukraine has also issued a warning about people using Bitcoin and other digital currencies.

Ukraine's economy collapses after conflict with Russia

     While Ukraine’s economic collapse was caused by a variety of factors, the biggest reason was the conflict with Russia. Not least, Ukraine’s economy was plagued by capital controls that made it nearly impossible to move money around the country.

The situation is even more dire now, as inflation in Ukraine hits a new high of 44%. As the Hryvnia loses its value, the prices of goods and services are skyrocketing, leaving consumers with less purchasing power. Ukraine suffered from inflation rates of nearly 25% back in 2014, and the situation has not improved in the past twelve months.

     But help is coming, as capital controls will be gradually lifted in the coming months. Thanks to the bailout cash from international creditors, Ukraine's economy will continue to survive and hopefully reduce inflation to 5% by the end of 2019. A total of $9 billion in U.S. bailout funds will be used to rescue the Ukrainian economy in the near future.

     As one would expect, funds have been raised from many sources. Funds from the IMF ($4.5 billion), the EU ($1.5 billion), and U.S. loan guarantees ($1 billion) will provide Ukraine with an opportunity to recover over the next few years.

Planning on Bitcoin time?

     Like most central banks in the world, the Central Bank of Ukraine is not enthusiastic about Bitcoin and other digital currencies. Just a few months ago, it issued a warning about the dangers of Bitcoin and advised consumers to avoid this currency because it is not controlled or guaranteed by the central bank.

      Meanwhile, the country’s residents have been struggling to balance their books. But due to strict capital controls, it is difficult for Ukrainians to protect their wealth in the event of a further economic crisis. However, Bitcoin could provide them with an opportunity, and despite the central bank’s warnings, new Bitcoin exchanges will be established in the country in the near future.