Moscow’s CBDC Plans Attract Interest from Russian Allies

Russia’s digital ruble project has sparked the curiosity of its allies, who are keen to use the central bank digital currency (CBDC) for cross-border trade. A key lawmaker revealed that foreign partners have expressed interest in this payment tool, which could help them bypass Western sanctions and create a more convenient and safe trading environment.

Russia to Promote Alternative Payment Systems

According to Tass, Anatoly Aksakov, the chairman of the State Duma’s Financial Markets Committee, said that during negotiations with Russian allies, overseas leaders had repeatedly expressed interest in using digital assets like the digital ruble for cross-border settlements. He said that this payment tool could provide more stability and security for trade transactions, as well as reduce dependence on the US dollar and other foreign currencies.

Aksakov was speaking ahead of the second reading of a bill that will allow Russian firms and their trading partners to use digital financial assets as cross-border payment tools. The bill, which was approved by the Duma on February 27, is part of a broader legislative framework that aims to regulate the crypto and blockchain industry in Russia.

The bill also appears to be a fast-tracked attempt to speed up blockchain-powered efforts to circumvent USA, UK, and EU-led sanctions, which have been imposed on Russia over its annexation of Crimea, its involvement in the Syrian civil war, and its alleged interference in the 2016 US presidential election.

Earlier this week, Russian Finance Minister Anton Siluanov told the media outlet RIA Novosti that Russia will use its BRICS presidency this year to promote alternative payment systems.

Siluanov also added that Moscow was now ready to start piloting payments made in digital currencies with China and Eurasian Economic Union member states. The Eurasian Economic Union is a regional economic bloc that includes Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia.

Russia’s Digital Ruble Project

Russia’s digital ruble project was announced in October 2020 by the Central Bank of Russia (CBR), which said that it would issue a CBDC as an additional form of money alongside cash and non-cash rubles. The CBR said that the digital ruble would be a legal tender that could be used for retail payments, salaries, pensions, and social benefits.

The CBR also said that the digital ruble would be based on a hybrid model, which combines the elements of both centralized and decentralized systems. The CBR would act as the sole issuer and regulator of the digital ruble, while authorized operators, such as banks and payment service providers, would provide access to the digital ruble platform and facilitate transactions.

The CBR plans to launch a prototype of the digital ruble platform by the end of 2021, and conduct pilot tests with selected participants in 2022. The CBR expects to launch the digital ruble for public use by 2023, after receiving feedback from the pilot tests and finalizing the legal and technical aspects of the project.

Russian Allies’ CBDC Plans

Russia is not the only country that is pursuing a CBDC project. Several of its allies, including Belarus, Kazakhstan, and Kyrgyzstan, have also announced plans to accelerate their own CBDC plans in recent months. Minsk, in particular, has put great emphasis on its intentions to use the digital Belarusian ruble in cross-border trading.

However, analysts said that the draft law put before the Duma on February 27 only contains clauses about Russian digital financial assets like the digital ruble. Allies’ tokens are not mentioned in the bill’s text. Other experts have claimed that technological barriers may hamper Russian companies’ efforts to use the digital ruble and other assets.

Siluanov, meanwhile, concluded that Moscow intends to promote the idea of using digital currencies with its partners, and that the digital ruble project is a strategic priority for Russia’s economic development and financial sovereignty.