The Bank of Russia’s central bank digital currency (CBDC) pilot, which was scheduled to begin on April 1, has been delayed indefinitely due to specific legislation only passing through the first reading in the Federal Assembly’s lower house. The legislation is expected to be enacted by early May, according to a report by the state-owned TASS.
The CBDC pilot was initially set to involve 15 private banks, but the number has since been reduced to 13. Some of the employees from these banks, along with one of the country’s largest insurance companies, Ingosstrakh, will become the test participants for CBDC retail payments.
Bank executives have expressed enthusiasm for the project, with the director of innovations at Sinara Bank, Vitaly Kopysov, stating that “the use of smart contracts should reduce the operational load of banks and make the deals transparent, which not only will reduce the chances of the misuse of government and banks’ funds, but ultimately simplify the control over the existing contracts.”
Although the pilot will involve real operations and limited consumers, the general public will be unable to participate in the first stage. The banks will enter the pilot with selected customers, and the Bank of Russia will determine how to scale the digital ruble further following the first stage.
The CBDC pilot was initially scheduled for 2024, but it was moved to an earlier date as the Russian central bank sought an alternative to the SWIFT payments system amid Western economic sanctions against Russia. The digital ruble aims to provide a secure and transparent payment system that reduces the dependence on foreign payment systems and minimizes the risk of financial crimes.
The Bank of Russia has been working on the development of the digital ruble since 2019, and it aims to provide an efficient payment system that can be used for various transactions. The CBDC will be a legal tender that will function similarly to traditional cash, but it will be digital and operate on a blockchain network.
The delay in the CBDC pilot rollout is expected to be a temporary setback, as the Bank of Russia remains committed to implementing the digital ruble. The CBDC will provide a secure and efficient payment system that will benefit the economy and the financial system as a whole.