- Russia push for its Digital Ruble is gaining momentum.
- Despite the growing CBDC sentiment, experts believes Bitcoin might be a better for cross-border transactions .
First Deputy Governor of the Bank of Russia Olga Skorobogatova believes that the integration of Central Bank Digital Currencies (CBDCs) has the potential of replacing SWIFT, a popular financial network messaging system. This would mean that payments and other information on these CBDCs would be carried out on another settlement infrastructure entirely different from the one currently utilized.
According to Skorobogatova, interested countries would only be required to have an agreement per its operational modalities.
Russia has been seeking alternative payment options to evade Western sanctions since its invasion of Ukraine. At one point, the country was considering the option of accepting payments in Bitcoin (BTC) for the sale of its oil and gas from “friendly” countries like China and Turkey. From that time till now, Skorobogatova has demonstrated a high level of confidence in Russia’s capacity to circumnavigate the existing payment embargo.
After a thorough search for alternatives, Russia is now putting effort into developing and rolling out its national digital currency, a digital Ruble.
The intended CBDC will be designed to possess cross-border features to facilitate international trade. Speaking of technicalities, the CBDC will adopt a hybrid formula integrating centralized and blockchain solutions. While there is an immediate need for this payment option, Skorobogatova has confirmed that the project will be carried out in phases.
Russia Plans to Test Digital Ruble, Is BTC May Be Preferred?
Russia plans to design the digital Ruble like China’s digital Yuan, hence their pilot phase would be similar.
Unlike some other nations who promoted their CBDCs usage by using them for payment in their government parastatals, Skorobogatova claimed that Russia would not resort to such a strategy while also comparing it to the Russian card payment system known as Mir. Specifically, she confirmed that the government will not pay employees salaries with the digital Ruble to stimulate its usage.
Instead, the Bank of Russia will be the primary tester of the digital Ruble and a separate unit would be dedicated to resolving any form of controversy that may arise. Notably, loans will not be issued in the CBDC nor will interest rates be charged as the national digital currency is designed solely for payments and transfers.
The executive added that in the meantime, Russia’s focus is on introducing a retail CBDC although in the near future, offline capabilities may be added.
“For offline payments, you need to develop your own solutions. This is in our plans, but not at the first stage,” Skorobogatova said.
Amidst a CBDC rally amongst nations, some entities are still concerned about the drawbacks of implementing a national digital currency. US Presidential candidate, Robert F. Kennedy Jr. believes that CBDCs are tools of control and oppression that are very likely to be abused.
He acknowledges that it does not offer financial freedom and pales based on the decentralization which BTC provides. With such an argument, many experts and crypto proponents believe Bitcoin may be a preferred cross-border payment option for many.
