In response to Western sanctions, the Central Bank of Russia (CBR) has accelerated the development of the digital ruble. Monetary authorities now intend to pilot transactions with the new version of the national fiat currency in early 2023 rather than 2024 as originally planned.
CBR to launch transactions and smart contracts with digital ruble as early as next year
Sanctions imposed on Moscow’s invasion of Ukraine have persuaded the Russian central bank to speed up the development of a digital version of the ruble, according to Russian-language Forbes, citing Olga Skorobogatova, first vice-chairman of the Russian central bank. She revealed this at a conference organized by the Russian Banking Association.
The senior official said the Russian central bank initially planned to conduct a pilot of the digital ruble with real transactions and users in 2024, but has decided to launch the project in April 2023. At the same time, the regulator also wants to start implementing smart contracts based on the digital ruble infrastructure.
Last spring, the Central Bank of Russia announced that a prototype of the digital ruble would be ready by the end of 2021, and that it would be put into trials with commercial banks in 2022. It began testing the platform in February of this year and announced its first successful transfer between personal wallets later that month.
The CBR detailed that users can open a digital ruble wallet through the mobile app, exchange regular electronic money in their bank accounts for digital rubles, and then transfer coins between them. At the time, Skorobogatova guaranteed that digital currency transactions would be free for all Russians and available in every region of the country.
So far, more than a dozen Russian banks have applied to join the project’s pilot group, and three of them have already connected their systems to a central bank digital currency (CBDC) platform. In the announcement, CBR revealed that two of the financial institutions have successfully completed the full cycle of digital ruble transfers between customers.
Russian banks are starting to test the digital ruble amid disagreements with the Ministry of Finance over the future of cryptocurrencies in Russia. While the ministry wants them to be legalized and regulated, the monetary authority proposes a blanket ban on crypto-related activities. Discussions on the matter continued in Moscow, but the central bank maintained a tough stance, insisting that legalizing its circulation would pose risks to the country’s financial stability and its citizens.
Forbes quoted Fitch analysts as saying they expect the CBR to continue to advocate for a ban on decentralized cryptocurrencies in order to make room for the development of its own digital currency. They also argue that the advent of the digital ruble could lead to outflows from deposits in the banking system, increased competition in financial markets and higher interest rates.
Do you think Russian banks will be able to successfully issue digital rubles by April 2023? Let us know in the comments section below.
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