Thursday, 20 June 2024

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What’s next for Russia’s CBDC project?

What’s next for Russia’s CBDC project?

The pilot for Russia’s central bank digital currency (CBDC) pilot should have been launched on April 1, but it was delayed at practically the last moment due to the slow pace of the necessary associated legislation passing through parliament. 

However, with the launch of the pilot still possible in May and the general roll-out of the digital ruble scheduled for 2024, the Russian project remains one of the most important CBDC developments to watch — especially given its possible role in cross-border payments between BRICS countries (Brazil, Russia, India, China and South Africa) and the intent to include it in the massive state-controlled pension system.

A brief timeline of Russia’s CBDC

The first time the Bank of Russia, the country’s central bank, announced its plans to explore the possibility of issuing a digital currency was in 2017. Back then, the bank’s first deputy governor, Olga Skorobogatova, said a CBDC would be a priority for the bank and that it would be looking into it in the near future.

However, at the time, Skorobogatova’s boss — Bank of Russia Governor Elvira Nabiullina — refused to acknowledge it as a “top priority,” instead calling it “a medium-term, or, perhaps, a long-term” prospect.

In 2022, the Bank of Russia revealed it planned to roll out the digital ruble across all banks in the country by 2024. The bank said the implementation would take place in stages and involve extensive testing and infrastructure development. It stated that the digital ruble would coexist with cash and non-cash payment systems, providing consumers more flexibility.

Perhaps the most significant factor in accelerating the CBDC’s development was the need for a reliable tool for foreign trade and settlement following Russia’s invasion of Ukraine and the subsequent sanctions implemented by several countries worldwide.

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By early 2023, local media was reporting that the Bank Of Russia had begun studying two possible cross-border settlement models with the digital ruble.

In February 2023, Skorobogatova publicly announced that the first consumer pilot for the CBDC would take place on April 1, 2023. The experiment would involve 13 local banks and several merchants, as well as real consumers — though it would be limited to the employees of participating companies.

Russian state media subsequently reported that the pilot was delayed pending the passage of specific…

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