Russia to begin work on CBDC settlement system in Q1 as sanctions endure: Report

Published at: Jan. 10, 2023

Russia’s central bank is reportedly set to begin developing a cross-border settlement system using its Central Bank Digital Currency (CBDC) amid ongoing sanctions in response to its invasion of Ukraine.

The plans to move forward with Russia’s digital ruble are expected to come in the first quarter of 2023 and will see Russia's central bank study two possible cross-border settlement models, according to a Jan. 9 report from local media outlet Kommersant.

The first proposed model sees various countries entering into separate bilateral agreements with Russia to integrate their CBDC systems.

Each agreement would be made to ensure the conversion and transfer of assets between the countries are in accordance with the rules of the agreements.

The second, more complicated model proposes a single hub-like platform for Russia to interact with other countries, sharing common protocols and standards to facilitate payments between the connected countries.

Roman Prokhorov, the head of the board of the Financial Innovations Association (AFI) opined that the first model was more simple to implement but less promising for bilateral interactions between countries.

The other option was more “advanced” and he considered an initial two-way system may be implemented with China as the most likely partner for its “technological and political readiness.”

Earlier reports in Sep. 2022 claimed Russia was planning to use its digital ruble for settlements with China by sometime in 2023.

Still, others believe Russia’s CBDC play won't be hamstrung by technology, but rather by politics.

Vice President of the Association of Banks of Russia, Alexey Voylukov, said introducing a digital ruble won’t change or improve Russia’s global political situation and trials for the CBDC platform can only be undertaken with Russian government-friendly countries who are technologically ready.

Related: Crypto regulation world: How laws for digital assets changed in 2022

Previously, the Bank of Russia said it was looking to roll out its digital ruble by 2024, with all banks and credit institutions connected to the CBDC’s platform.

Russia has faced mounting financial and trade sanctions since its escalation of the Russo-Ukrainian war when it launched a full-scale invasion of Ukraine in late-February 2022.

It’s since tried to enact policies, or pondered ways to skirt the sanctions such as the central bank considering the use of cryptocurrencies in the country “only to support foreign trade.”

The Bank of Russia and the Ministry of Finance came to an agreement in Sep. 2022 on a rule allowing Russians to send cross-border payments using crypto.

Tags
Adoption
Russia
Remittances
Sanctions
Bank Of Russia
Central Bank
Cbdc
Politics
Related Posts
One-tenth of Russians ready to get salaries in digital ruble, report says
Amid the Bank of Russia continuing progressing with its central bank digital currency (CBDC) development, one survey suggested that few Russians are ready to accept salary payments in the digital ruble. Almost half of the Russian respondents strongly objected to receiving salaries in the digital ruble in a new survey by local recruitment site HeadHunter. Only 11% of respondents said that they were ready to get salaried in the digital ruble, while 41% indicated that they were “categorically opposed” to being paid in the CBDC, local news agency Izvestia reported on Wednesday. As Russia is preparing to roll out digital …
Adoption / July 28, 2021
Digital currencies won’t impact US sanctions, Treasury exec says
Central bank digital currencies (CBDC) like Russia’s digital ruble do not pose any threat to United States sanctions, according to U.S. Deputy Treasury Secretary Wally Adeyemo. In a CNBC interview on Wednesday, Adeyemo argued that the U.S. dollar “will remain the dominant currency in the world” despite the increasing popularity of cryptocurrencies. Adeyemo pointed out that digital assets provide an “opportunity in lots of ways” for the U.S. economy, but it’s also associated with many challenges like money laundering. However, there are ways to combat this in order to benefit from the growing industry, the official said: “We do think …
Adoption / Nov. 19, 2021
Russia’s Central Bank Goes to War. Is Cryptocurrency a Friend or Foe?
In January 2022, the Central Bank of Russia (CBR) proposed a number of measures aimed at curtailing the country’s cryptocurrency market, which included a blanket ban on the use and mining of all cryptocurrencies. It pointed out risks posed by the volatile nature of cryptocurrencies to the financial stability of the country, the extensive use of crypto in illegal activity and the energy costs involved in crypto mining. However, the utility of blockchain technology didn’t escape the CBR. The following month, it announced that it had started the pilot stage of the digital ruble, its planned central bank digital currency …
Regulation / March 17, 2022
Russia to roll out CBDC pilot with real consumers in April
The Bank of Russia is preparing to roll out the first consumer pilot for the nation’s central bank digital currency (CDBC) on April 1, 2023. The central bank of Russia is set to debut soon the first real-world digital ruble transactions involving 13 local banks and several merchants, first deputy governor Olga Skorobogatova said. The official noted that the upcoming CBDC pilot will involve real operations and real consumers in Russia, but will be limited to a certain number of transactions and customers, the local news agency TASS reported. “We plan to launch the digital ruble project on April 1, …
Adoption / Feb. 17, 2023
Five Russian banks express interest in piloting digital ruble
A number of financial institutions in Russia have expressed interest in testing the country’s central bank digital currency, or CBDC. According to an Oct. 16 report by local news agency Izvestia, at least five Russian banks are interested in taking part in Russia’s non-public digital ruble pilots in the first half of 2021. The list of banks includes state-backed Promsvyazbank, the Credit Bank of Moscow, commercial bank Zenit, mortgage bank Dom.RF, and Crimea’s Russian National Commercial Bank. As reported, the latter wants to be actively involved in the first pilots in order to provide Crimea with the “most innovative banking …
Technology / Oct. 16, 2020