According to reports, Russia’s central bank is set to start developing a cross-border settlement system using a central bank digital currency (CBDC) amid ongoing sanctions in response to its invasion of Ukraine.
Plans to move forward with Russia’s digital ruble are expected to arrive in the first quarter of 2023. Such plans will see Russia’s central bank study two possible cross-border settlement models, according to a Jan. 9 report by local news outlet Kommersant.
In the first proposed model, several countries enter into separate bilateral agreements with Russia to integrate their CBDC systems.
Each agreement would be made to ensure that the conversion and transfer of assets between the countries are in accordance with the rules of the agreements.
The second, more complicated model proposes a single, hub-like platform for Russia to interact with other countries, sharing common protocols and standards to facilitate payments. between the connected countries.
Roman Prokhorov, head of the Board of the Association for Financial Innovations (AFI), He felt that the first model was simpler to implement but less promising for bilateral interactions between countries.
The other option was more “advanced” and considered that an initial two-way system could be implemented, and that China was its most likely partner given its “technological and political readiness”.
Reports in September claimed that Russia planned to use its digital ruble for its deals with China sometime in 2023.
Even so, others believe that the work of Russia’s CBDC will not be hampered by technology, but rather by politics.
Vice President of the Russian Banking Association Alexey Voylukov said that the introduction of a digital ruble will not change or improve Russia’s global political situation, and trials for the CBDC platform can only take place with countries that are friendly to the Russian government and technologically ready.
Earlier, the Bank of Russia said it expected to roll out its digital ruble by 2024.with all banks and credit institutions connected to the CBDC platform.
Russia has faced increasing financial and trade sanctions since its escalation of the Russo-Ukrina War when it launched a full-scale invasion of Ukraine in late February 2022.
Since then, ways to skirt the sanctions have been tested and reflected upon. The central bank considered the use of cryptocurrencies in the country “only to support foreign trade.”
The Bank of Russia and the Ministry of Finance reached an agreement in September on a rule that allowed Russians to send cross-border payments using cryptocurrencies.
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