Russia has begun testing the digital ruble, with the country’s central bank announcing the first complete transactions between individual wallets. The monetary authority, which has been a vocal opponent of cryptocurrencies, claims that its digital currency will open up new avenues for citizens, businesses, and the Russian state.
Transactions in Digital Rubles Commercial banks and the Bank of Russia carried out the transaction.
The Russian Federation’s Central Bank (CBR) and other financial institutions have begun testing the digitalized national fiat currency. The trials began in December 2021, after a prototype of the digital ruble platform was completed.
Twelve banks applied to be part of the project’s pilot group, and three of them have already connected their systems to the CBDC platform. According to the regulator, two of the banks have successfully completed a full cycle of digital ruble transfers between clients using mobile banking applications.
According to the CBR, users were able to open digital ruble wallets through the apps, exchange regular electronic money from their bank accounts for digital rubles, and then transfer the coins between themselves.
The digital ruble operates on a two-tiered system. Bank of Russia is the platform’s issuer and operator, with end users gaining access through intermediaries. They will be able to create wallets and conduct transactions through any bank’s mobile app. According to Olga Skorobogatova, First Deputy Chairman of the CBR, the digital ruble platform represents a new opportunity for citizens, businesses, and the state.
Transfers using the sovereign digital currency will be free for Russian residents and available throughout the country, she explained. Companies will also benefit from lower transaction costs and the ability to offer new products and services as a result of the system. The government will have a tool for targeted payments and budget management.
Participants will focus on opening wallets for banks and private clients during the first stage of the trials. The second stage will involve payment processing, including payments for public services, smart contract implementation, and interactions with the Federal Treasury.
Future plans include allowing non-residents to use the digital ruble and introducing offline transactions. A roadmap for the full implementation of the new form of fiat currency will be drafted based on the results of the piloting phases.
The CBR has been developing its digital currency alongside ongoing discussions in Russia about the future of cryptocurrencies. In January, the monetary authority vehemently opposed their legalization and proposed a blanket ban on crypto-related operations.
However, its hardline stance has isolated it in Moscow, as other institutions, including the federal government and the finance ministry, have backed regulation under strict rules as a more appropriate approach than total prohibition.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.