Ukraine Clarifies Rules on Foreign Currency Banknote Exchange and Collection

The National Bank of Ukraine has clarified the rules regarding the acceptance and exchange of foreign currency banknotes, particularly US dollars. According to the regulations, banks and non-bank financial institutions are not allowed to impose restrictions on the year of issue or denomination of foreign currency banknotes as long as they are legal tender in their respective countries.

The regulator emphasized that a banknote's design and security features must correspond to the descriptions on the websites of the central banks of the respective countries, and its authenticity must be confirmed by special equipment. The National Bank specified how exactly a cashier should verify banknotes, using counters or sorters with ultraviolet, infrared, and magnetic protection control functions or special detectors that provide image magnification and visualization of relevant security elements.

The boundary between ordinary exchange and collection lies in the condition of the banknote. According to the regulations, a banknote is considered heavily worn or damaged if it has acquired one or more signs of significant wear/damage during circulation. This includes torn or cut banknotes, those with damaged design and security elements, local stains covering more than half of the banknote's area, general contamination, burned or scorched banknotes, and obvious printing defects.

Collection is a different procedure applied to banknotes with specific signs of significant wear or damage. Authorized institutions must have a relevant contract with a foreign correspondent bank, and the degree of wear of foreign currency banknotes is determined by the central banks of the respective countries. The regulator acknowledged that due to the war, financial institutions have increased collection fees.

The National Bank received a total of 905 citizen appeals regarding refusals to exchange or accept worn and damaged foreign currency banknotes for collection from 2023 to 2026. The numbers show that active public pressure and regulator measures have had a tangible effect on the market situation, with the number of complaints decreasing significantly in recent years.