As the development of the state-issued digital currency continues, the monetary authority intends to gradually connect various financial institutions to the platform.
Bank of Russia targets full launch of digital ruble in two years
The Central Bank of the Russian Federation (CBR) recently published a draft document that sets out the main directions of its monetary policy for the next three years. The document reveals that one of the main goals of the regulator will be the introduction of a digital version of the national fiat currency, the ruble :
In 2024, the Bank of Russia will begin to gradually connect all credit institutions to the digital ruble platform and increase the number of payment options and transactions available using smart contracts.
While the full-scale implementation of the digital ruble will begin in two years, some of its features, such as offline mode, as well as connecting non-bank financial organizations and exchanges, are expected in 2025, Russian crypto news site Bits.media reported, citing the bank.
The gradual approach to the introduction of the central bank’s digital currency (CBDC) will allow market players to adapt to the new conditions, CBR noted. The bank also noted that, if necessary, certain restrictions could be imposed, such as limiting the amount of digital rubles that can be held in a single wallet or setting a maximum amount that can be transferred in each transaction.
Critics have warned that CBDC can potentially threaten the stability of the banking system, but the Bank of Russia does not expect a large-scale flight of funds from bank deposits, as traditional financial institutions attract capital by offering interest payments and bonus programs. For Russian banks, the digital ruble should serve “as an additional incentive to increase the attractiveness of bank accounts“, the CBR added.
Keeping money in bank accounts has certain advantages over storing cash in digital wallets, as the former accumulate income, the central bank said. For this reason, the Bank of Russia does not intend to pay interest on digital ruble holdings on its CBDC platform.
The latest timeline for the digital ruble follows an earlier official statement that the CBR is accelerating the project’s schedule. In June, Deputy Governor Olga Skorobogatova announced that a roadmap for the full implementation of the new form of the national currency was expected by the end of 2023.
CBR is also preparing to begin testing with real transactions and users next April, earlier than originally planned. In May, Olga Skorobogatova admitted that financial sanctions imposed by the West following Russia’s military invasion of Ukraine had played a role in the bank’s decision to accelerate the development of the CBDC.