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The Bank of Russia noted that the country’s existing digital payment infrastructure can support the new Digital Ruble as payment rails for the CBDC. Besides, the central bank plans to introduce the CBDC for all participants including government, citizens, businesses, etc.
On Tuesday, October 13, the Bank of Russia said that it is considering the possibility of launching its own central bank digital currency (CBDC) aka Digital Ruble. The central bank of Russia also released a consultation paper for the development of the Digital Ruble.
In its report, the central bank noted that the Digital Ruble will be a supplement to cash and non-cash rubles and not a replacement. So far, the central bank is not quite sure of issuing its CBDC at this stage. The Bank of Russia will conduct a public consultation to see the acceptance of digital currency among locals. This is similar to the latest measures initiated by the European Central Bank (ECB) for Digital Euro.
The Bank of Russia said that before issuing the Digital Ruble, it will weigh several aspects like the advantages and risks. Besides, it will also discuss the Digital Ruble project “with the financial sector, the expert community as well as with all stakeholders”. It is still not clear whether the Digital Ruble project will use a distributed ledger or a centralized system. But the report goes on to mention the value of smart contracts on a blockchain platform.
The consultation paper notes that Digital Ruble will help to make payments “faster, more simple and secure”. Besides, it adds that the CBDC will help alleviate the risk of capital outflow. It states: “The national digital currency will also limit the risk of reallocation of funds into foreign digital currencies, contributing to macroeconomic and financial stability.”
The central bank conceptualized the Digital Ruble CBDC for both – offline and online payments. Also, the Digital Ruble shall be accessible through e-wallets and mobile devices.
Russia’s Take on Cryptocurrencies
Central Bank Digital Currencies (CBDCs) are the latest trend in the market with major economies experimenting with it. It is not for the first time that Russia is also exploring its CBDC concept. Last year, the central bank said that it is already studying the CBDC concept but doesn’t plan to introduce it anytime.
It looks like as other economies have accelerated their CBDC developments, the Bank of Russia is now seriously considering at its end. Interestingly, it plans to introduce the Digital Ruble for “all the agents in the economy”. This includes the government, businesses, financial participants, and even citizens.
The Bank of Russia notes that the Digital Ruble will help it better track government spending. It is also confident that they can use the existing digital payment infrastructure as payment rails for the CBDC. Russia has been recently warming up to cryptocurrencies and stablecoins looking at the global response.
In August 2020, Russia’s Expobank started issuing loans by keeping cryptocurrencies as collaterals. Moreover, the country’s largest bank Sberbank expressed the desire to issue its own stablecoin under the country’s new crypto law.
As more and more countries are working on their CBDC project, top global institutions like the World Bank, IMF, BIS, and others have come together to form the framework of using CBDCs in the banking system.