The central bank of Russia will ensure that the digital ruble they are developing will be available for use by non-residents and would also be convertible into digital currencies. The regulator has reiterated its concerns about the risks pertaining to currencies in a document that’s aimed at digitalizing the Russian financial sector and said that it is safer to use state-issued digital currencies.
Therefore, the Central Bank of the Russian Federation (CBR) would be willing to facilitate the conversion of the digital ruble into other foreign currencies and said that it would also permit people living outside its jurisdiction to open as well as use wallets for the digital ruble.
A project by the name of ‘Main Directions for Digitalization of the Financial Market 2022-2024’ was recently published and the monetary authority disclosed their intentions in it. It was back in 2018 that the bank of Russia had first begun to look into the development of a central bank digital currency (CBDC), but it wasn’t until last year that they had seriously contemplated the idea of issuing one.
In October 2020, a consultation paper was published for gathering feedback from different players in the financial sector. A digital ruble concept was released in April 2021, which outlined the principal architecture.
A digital ruble pilot group was also formed by the CBR in June with about a dozen banks and some other shareholders. The central bank wants to complete the prototype of the platform by the end of this month and want to start trials of the CBDC in the next month.
It is planning to expand the types of transactions as well as the range of participants gradually. In 2022, Bank of Russia is planning on issuing invitations to credit organizations during the first stage of the trials and also conduct consumer-to-consumer operations.
Financial intermediaries, such as marketplaces, exchanges, non-bank payment service providers, brokers and insurance companies, as well as the Federal Treasury will join the program during the second stage. They will introduce offline mode, smart contracts, along with the option of converting the digital currency into foreign currency.
According to the CBR, using the offline mode of the digital ruble will ensure that the population has a greater number of financial services available. It said that they would be able to keep the transaction costs down with the uniform fees. The platform will also be used for making targeted payments to businesses and citizens.
The document also highlighted the concerns of the Russian central bank regarding the risks associated with decentralized cryptocurrencies, such as bitcoin. The CBR stated that it is not possible to use these cryptocurrencies as a means of payment because they are highly volatile.
The bank recognized that approaches to regulation may differ, but it is in favor of tightening the rules for monitoring the crypto space. Moreover, the Bank of Russia also insisted that a central bank digital currency (CBDC) can fulfill the need for making safe digital payments, so people wouldn’t require cryptocurrencies.