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Bank of Russia Plans Digital Ruble Implementation By 2024

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By Shella Artillero - - 5 Mins Read

Russian commercial banks have been instructed by the central bank to get ready to deal with a digital ruble within the next two years, which suggests that a central bank digital currency (CBDC) could be on the horizon.

A paper from the Bank of Russia, the nation's central bank, dated August 11 and stated that as early as next year, a digital form of the ruble might be ready and suitable for settlement between individuals and businesses.

According to the study, the Russian CBDC could be used by 2024 to link financial institutions to the ruble's digital platform and to "expand the number of payment choices and transactions available via smart contracts."

The CBDC is anticipated to lower settlement and transaction costs in comparison to currently used techniques, according to the central bank.

The deployment would be cautious and incremental, the memo emphasized, in order to prevent mistakes along the way.

According to the document, "the staggered introduction of the digital ruble will give market participants the time to adapt to new conditions."

One of the goals of the project, according to regional news source CNews, is to make financial services more accessible in distant regions of Russia, particularly those with poor internet connectivity. 

With plans for cooperation between Russian and international central banks for cross-border and foreign exchange operations, the central bank also aims to increase the Russian economy's competitiveness.

Although the Bank of Russia does not anticipate a significant outflow of money from bank deposits, critics have warned that the CBDC could potentially endanger the stability of the banking system. 

This is because traditional financial institutions draw capital by providing interest rates and bonus plans. The CBR stated that Russian banks should use the digital ruble as "an extra incentive to boost the attractiveness of bank accounts."

According to the central bank, keeping money in bank accounts has some benefits over keeping it in digital wallets because the former generate income. The Bank of Russia does not expect to pay any interest on holdings of digital rubles on its CBDC platform because of this.

The most recent schedule for the digital ruble was released in response to a previous official announcement that claimed the CBR was moving the project's completion date forward. 

By the end of 2023, a roadmap for the complete adoption of the new version of the national currency is anticipated, according to an announcement made in June by Deputy Governor Olga Skorobogatova.

The CBR is also getting ready to start testing with actual users and transactions in April of next year, ahead of schedule. In May, Skorobogatova acknowledged that the bank's decision to quicken the development of the CBDC was influenced by the financial sanctions imposed by the West in response to Russia's military invasion of Ukraine.