Just before dawn on February 24th, 2022, Russian troops poured into the north, east, and south of Ukraine, unraveling a world order that had governed since the fall of the Soviet Union. As Western leaders squabbled over how to pick up the pieces of the capitalist and globalist society they had stitched together over the last thirty years, massive lines appeared at ATMs and bank branches across Ukraine, capital flooded out of the country, and bond prices and exchange rates plummeted. The alarm bells were ringing, and Ukraine’s banking system teetered on the brink of collapse.

This collapse wouldn’t have just stolen wealth; it would’ve handed Putin the keys to Ukraine, starved much of the country’s population, and denied Ukrainians the ability to flee to safety. Functioning payment rails, liquidity systems, and capital markets are fundamental not only to battlefield success, but also to a stable economy and to the very definition of a nation-state. And in this era of fintech and decentralization, upholding these key functions isn’t just a government mandate - it falls to the wide array of crypto exchanges, neobanks, payment apps, and other services that have sprung up in the last decade-plus. State actors, while still critical, are no longer the only show in town. Borderless, privatized financial services, when backed by inclusive regulation, are the biggest levers for democratization and economic stability.

Decisive state response to the invasion

To its credit, Ukraine’s government reacted swiftly to the invasion, albeit with a safety net of a few billion in international reserves stocked by the IMF and other institutions. Just hours after the invasion began, Ukraine’s Central Bank, the National Bank of Ukraine (“NBU”), announced a series of emergency measures to stabilize the banking system, including limits on cash withdrawals, a freeze on foreign exchange markets, liquidity provisions for member banks, and a fixed exchange rate. In parallel the NBU reinforced transaction infrastructure across its network with help from cloud services like AWS and internet providers like Starlink, ensuring that SEP, the country’s primary interbank payments scheme, and other cashless payments systems could operate effectively.

As success on the battlefield loosened monetary and fiscal policy, officials relaxed certain measures, like a strict peg to the US dollar, while adding others, including 100% deposit guarantees for retail consumers and hefty interest rate hikes, to the web of wartime red tape. Only made possible because of the massive cleanup of the country’s banking system launched in the wake of the political and economic crises in 2014, these decisive policy choices kept the economy and the country afloat.

Fintechs have had a central role to play

Of course, gaps in Ukraine’s banking system still emerged. Money movement was slow and inefficient, KYC / KYB and identity verification were difficult, affordable financing dried up, and cash and other forms of liquidity were scarce. And for the 30% of Ukrainians who remained unbanked and the millions of refugees forced from their homes, these issues were only magnified.

Enter fintech. With a thriving IT sector and a friendly regulatory environment, Ukraine had become a major player in the global fintech movement by the time Russian troops massed on the country’s borders. As soon as Putin announced his “special military operation”, this wave of momentum behind the industry crashed out into the open.