The Central Bank of Russia (CBR) has accelerated the development of its digital ruble in response to Western sanctions. The monetary authority now intends to conduct transactions with the new version of national fiat in early 2023 instead of 2024 as originally planned.
CBR will launch smart contracts, transactions with the digital ruble early next year
Sanctions imposed over Moscow’s invasion of Ukraine have convinced the Bank of Russia to accelerate development of a digital version of the ruble, the Russian-language edition of Forbes quoted CBR’s first vice president, Olga Skorobogatova, as saying. He made this disclosure during a meeting organized by the Federation of Banks of Russia.
The high-ranking official commented that Russia’s central bank initially scheduled a digital ruble pilot with real transactions and users for 2024, but decided to launch the project in April 2023. At the same time, the regulator also wants to start implementing smart digital contracts based on the ruble infrastructure.
Last spring, the Central Bank of Russia announced that the prototype of the digital ruble would be ready by the end of 2021 and that 2022 would be devoted to testing with the participation of commercial banks. It began testing the platform in February this year and later that month announced the first successful transfer between individual wallets.
Users were able to open a digital ruble wallet via a mobile app, exchange regular electronic money from their bank accounts for digital rubles, and then transfer the coins among themselves, CBR detailed. At the time, Skorobogatova assured that digital currency transactions would be free for all Russians and available in every region of the country.
A dozen Russian banks have so far applied to join the pilot group for the project and three of them have already linked their systems to the central bank digital currency (CBDC) platform. In its announcement, CBR revealed that the two financial institutions have successfully completed a full cycle of digital ruble transfers between customers.
The Bank of Russia began testing 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 proposed a complete ban on crypto-related activities. Discussions on the matter continue in Moscow but the central bank maintains its tough stance, insisting the legalization of their circulation poses risks to the country’s financial stability and its citizens.
Forbes quoted Fitch analysts who expect CBR to continue advocating for the prohibition of decentralized cryptocurrencies to make room for the development of its own digital currency. They also suggest that the emergence of the digital ruble could lead to an outflow of funds from deposits in the banking system, increased competition in the financial market, and raised interest rates.
Do you think the Bank of Russia will manage to issue a digital ruble by April 2023? Tell us in the comments section below.
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