In response to Western sanctions, the Central Bank of Russia has increased development of its digital currency. In response to Western sanctions, the Central Bank of Russia (CBR) now plans to begin pilot transactions using the latest version of its national fiat in 2023 and not 2024 as previously planned.
As early as next year, CBR launches Smart Contracts with Digital Ruble, Transactions and Smart Contracts
Sanctions imposed over Moscow’s invasion of Ukraine have convinced the Bank of Russia to speed up the development of the digital version of the ruble, the Russian-language edition of Forbes reported, quoting CBR’s First Deputy Chairman Olga Skorobogatova. This was revealed at a meeting of the Association of Banks of Russia.
The high-ranking official remarked that Russia’s central bank had initially scheduled the digital ruble pilot with real transactions and users for 2024 but it has been decided to launch the project in April 2023. The regulator is also keen to implement smart contracts that are based on digital ruble technology.
Last spring, the Central Bank of Russia announced that the digital ruble’s prototype will be ready by the end of 2021 and devoted 2022 to trials with the participation of commercial banks. In February, the Central Bank of Russia began testing the platform and reported the first successful transactions between individual wallets.
Users were able, according to CBR, to create digital ruble wallets via mobile apps and exchange traditional electronic money from their banks for digital rubles. Then, they could transfer the coins between them. Skorobogatova stated that digital currency transactions would be available to all Russians in any region and free of cost.
Twelve Russian banks applied so far to be part of the pilot program. Three have connected to the CBDC platform. The CBR announced that two of these financial institutions had completed the full cycle of digital ruble transfer between clients.
In the midst of disagreements with Russia’s Ministry of Finance regarding the future of Russian cryptocurrencies, Bank of Russia tested the digital ruble. Although the Ministry of Finance wants the digital rubles to be legalized, regulated and taxed, the Monetary Authority proposed an all-encompassing ban on cryptocurrency-related activities. Discussions on the matter continue in Moscow but the central bank maintains its hardline stance, insisting the legalization of their circulation brings risks for the country’s financial stability and its citizens.
Forbes quotes Fitch analysts, who believe that the CBR will continue to support a ban on decentralized cryptocurrency in order to allow for its development. These analysts warn that the creation of a digital ruble might result in an outflow in funds, greater competition, higher interest rates, and a decrease in deposits to the bank system.