Bank of Russia Steps Up Efforts to Issue Digital Ruble Due to Sanctions
The Bank of Russia has been persuaded by sanctions imposed in response to Moscow’s invasion of Ukraine that it will accelerate the development of the digital ruble. Forbes reported this Russian-language edition, quoting Olga Skorobogatova, First Deputy Chairman of CBR. This was revealed at a meeting of the Association of Banks of Russia.
A high-ranking official noted that Russia’s central banks had originally scheduled the pilot project with real users and transactions in digital ruble for 2024. However, it was decided to launch the project as early as April 2023. The regulator wants to also start implementing smart contracts that are based on the digital infrastructure.
The Central Bank of Russia announced last spring that the prototype of the digital ruble would be available by 2021. It also dedicated 2022 to trialling the technology with commercial banks. The platform was launched for testing in February and made the first successful transfers between individual wallets that month.
According to the CBR, users could open digital ruble wallets using mobile apps. They could then exchange regular electronic money for digital rubles and then transfer the coins between them. Skorobogatova stated that digital currency transactions would be available in all regions of Russia and will not cost any additional fees.
Twelve Russian banks have applied so far to join the pilot group. Three of these banks have connected their systems with the central bank digital currency ( CBDC ) platform. The CBR announced that two of the financial institutions had completed a complete cycle of digital ruble transfer between clients.
The Bank of Russia began testing the digital ruble during disagreements with Ministry of Finance about the future of cryptocurrency in Russia. The ministry wants them legalized, regulated, but the monetary authority proposed a blanket ban of crypto-related activities. Moscow continues to discuss the issue, but the central bank insists that legalizing their circulation poses risks for the country’s financial stability.
Forbes quotes Fitch analysts, who believe that the CBR will continue to advocate for a ban on decentralized cryptocurrency in order to allow room for its own digital currency. The Fitch analysts also suggested that the rise of the digital ruble could result in an outflow in funds from the banking system, increased competition and higher interest rates.