The Bank of Russia intends to begin a closed experiment of a ‘Digital Ruble’ with a number of local banks signalling their interest in participating in the trial.
According to local Russian news outlet Izvestia, Russia’s Central Bank will begin experimenting with the use of a pilot Central Bank Digital Currency after conducting public consultation. Five local banks are also willing to take part in the trial of the CBDC, namely MKB, PSB, Zenit, Dom.RF as well as the Crimean RNKB.
The start of the ‘Digital Ruble’ experiment is earmarked to take place sometime in the first half of 2021. The report also states that the Digital Ruble and its corresponding wallet would likely be powered by the equivalent of a traditional bank card, which would allow people to make transactions with the CBDC using a card – although existing payment terminals would need to carry out software updates to accept these cards.
Salaries and other payments could be made with Digital Rubles
The pilot project is still subject to a final decision on its feasibility which will take into account ongoing public consultations. If the experiment’s are given the green light, a limited number of users will take part in trials of the system.
The Bank of Russia reportedly told Izvestia that it was developing the CBDC platform itself with the aim of it becoming integrated to existing payment networks.
It is envisaged that individuals and businesses would be able to acquire Digital Rubles in exchange for physical cash or funds stored in bank accounts. The Central Bank is also exploring the possibility of making salary payments and benefits in Digital Rubles.
The Bank of Russia also expects local banks to facilitate wallet services and transactions using the Digital Ruble. The Digital Ruble is being touted as a cheaper and more efficient means of transacting in comparison to existing payment and settlement methods.
The report also noted that the Digital Ruble is intended to be used without an active internet connection. Users would have to transfer Digital Rubles from their online wallet to a mobile device in order to use their funds offline.
All five banks previously mentioned in this article have reportedly indicated that they are interested in participating in the trial of the Digital Ruble next year.
Pilot is ready to be conducted
The head of the State Duma’s financial markets committee Anatoly Aksakov told Izvestia that the pilot of a Russian CBDC could go ahead next year. It’s understood that technological and legal parameters have ironed out and that the pilot is ready to start.
Aksakov also indicated that a number of Russian organizations have expressed interest in using a digital form of the Ruble.
Russia is expected to publish its upcoming bill that will outline regulations on cryptocurrencies in the country in December this year. The bill, known as ‘On Digital Currency’ has been the subject of plenty of speculation with reports of stifling parameters for the use of conventional decentralized cryptocurrencies like Bitcoin and Ethereum.
