Blockchain
Putin Wants to Accelerate Implementation of Russia’s CBDC – Ledger Insights
During a meeting on economic issues earlier this week, Vladimir Putin appeared to be in favor of the Russian central bank’s digital currency (CBDC) the pilots accelerate, according to the Russian news agency TAX.
“Now we need to take the next step, namely to move towards a broader and more comprehensive implementation of the digital ruble in the economy, economic activity and the field of finance,” he said. Digital ruble Trials began in August last year, after months of delays awaiting supporting legislation.
The first wave of testing involved a dozen banks, while a second wave is expected to start in September with up to 19 additional banksincluding the largest in Russia, Sber.
In April, Elvira Nabiullina, Governor of the Bank of Russia, updated the Russian parliament on the Process status. He said that scaling will begin in 2025 at the earliest. On the timing of broader adoption, he said: “We think it will take five to seven years. It will be a natural process, because the choice of the people themselves and the company is key; it should be convenient for them.”
Digital assets to circumvent sanctions
Both a CBDC and digital assets are potential alternative cross-border payment instruments in the face of sanctions following Russia’s invasion of Ukraine. Even Vladimir Putin has spoken about digital assets.
“It is important for Russia to ‘seize the moment’, as they say, to create a timely legal framework and regulation, to develop infrastructure, to create conditions for the circulation of digital resources, both within the country and in relations with foreign partners,” he said.
Russia already has a digital financial resource (DFA) framework for tokenized assets, including commodities such as gold. The use of DFAs such as tokenized gold for payments is prohibited. However, the country has recently legislation passed supporting its use for cross-border payments. In addition, Iran claimed that it was work with Russia on CBDC and payments via tokenized assets.
Similarly, the central bank governor recently said that it was acceptable to use cryptocurrencies for international payments if it helps address sanctions. Until then, it had vehemently opposed any use of cryptocurrencies.
Timings, Sanctions and VTB Shanghai
Putin’s comments coincide with Russian media reports that sanctions would have halted payments between China and Russia. News stated in April that VTB’s Shanghai branch served as a significant channel for money transfers between Russia and China. However, VTB’s foreign branches in China and India have been added to OFAC list of sanctions June 12. In addition, sanctions against the Moscow Stock Exchange forced trading of dollars and euros on over-the-counter (OTC) markets.
A couple of weeks later, TASS reported that VTB CFO Dmitry Pyanov said, “It (the Shanghai branch) is in a period of adaptation to new realities.” He added that “everything will be fine” with the branch.
However, the day before Vladimir Putin’s comments this week, Russian news agency You see Reported payments through VTB Shanghai stopped reaching suppliers around June 20, according to multiple sources. The money arrives in Shanghai but is then blocked. There were also reports of a “software update” at VTB Shanghai that blocked payments.
This underscores Putin’s desire to accelerate other payment methods, especially new digital technologies such as CBDCs and digital assets that are eluding the West.