Russia's Digital Ruble Delayed: Central Bank Seeks More Consultation
1min read The Bank of Russia has announced a delay in the rollout of the digital ruble, initially planned for this summer. Central bank governor Elvira Nabiullina attributed the postponement to the need for further consultation with banks to determine the most suitable economic model for customers. The digital ruble project, which began due to banks' interest in smart contracts, has already undergone successful pilot testing with 1,700 people, 15 banks, and 30 companies participating.
The digital ruble, a fully functioning Central Bank Digital Currency (CBDC), was designed to operate alongside cash and digital payments, providing reliable services without interest or lending rates. The Banking Association estimated that a bank's adoption of the digital currency would cost $1.1 million, with the central bank providing extra support for smaller banks, including free technical support.
The digital ruble aims to reduce Russia's reliance on Western infrastructure for international payments and provide an alternative to the SWIFT payment system. This would allow Russia and other countries to continue operating businesses regardless of Western sanctions. The proliferation of CBDCs could potentially displace the dollar as an accepted medium of exchange and bypass the SWIFT international standard, which is currently used to sanction entire states with little competition.
The economic alliance of Brazil, Russia, India, China, and South Africa (BRICS), including additional partner countries, has sought more reliable forms of payment that do not overly rely on American-dominated standards. BRICS has created a BRICS Pay Consortium using QR codes to organize payments, referred to as a decentralized automated organization (DAO). Although the system is not explicitly a blockchain, the consortium has been upfront about its intentions to explore blockchain solutions.
Financial consultant Olga Goncharova has expressed concerns about the appropriateness of a digital central bank, citing security concerns and the potential lack of consumer preference for a digital currency. She argues that smart contracts could speed up loan processing and limit government spending, but these processes could also be completed with traditional means.
