Russia’s central bank intends to make the digital ruble convertible into foreign currency and available to non-residents. In a document dedicated to digitalization in the Russian financial system, the regulator reiterates concerns about cryptocurrencies. However, it insists state-issued digital currencies will be safer.
Bank of Russia opens its CBDC to Foreigners
CBR will enable the digital ruble to be exchanged with other currencies. It also allows users to use its digital ruble wallets from countries outside of Russia. The monetary authority revealed these intentions in its “Main Directions for Digitalization of the Financial Market, 2022 – 2024” project published recently.
Bank of Russia first considered a digital central bank currency (CBDC), in 2018, and then decided to investigate the possibility of issuing it last year. To gather input from players in the financial industry, an October 2020 consultation paper was made public. A digital ruble was released by the regulator in April 2021 to outline its primary architecture.
The CBR established a pilot digital ruble group in June with more than a dozen banks, and other stakeholders. The authority wants to complete the platform’s prototype by the end of December and begin trials with the CBDC in January. Forklog reported that the authority plans to expand the number of participants as well as the type of transactions. RBC also reported the draft.
Bank of Russia invites credit organisations to participate in the consumer-to-consumer stage of trials, which will take place in 2022. At the second stage of trials, Bank of Russia will invite credit organizations to join, as well as financial intermediaries like non-bank payments service providers and exchanges brokers marketplaces and insurance companies.
In addition, smart contracts will be available in offline mode. You can also convert digital rubles to foreign currencies using the online option. CBR believes that digital rubles offline will make financial services more accessible to the public. The CBR claims that transaction costs will be lower due to uniform fees. This platform can also be used for targeted payments to individuals and businesses.
Russian central banks once again drew attention in this document to the potential risks associated with digital currencies, such as bitcoin. CBR reiterates that cryptocurrency cannot be used to pay due to their volatility.
While acknowledging that there are many approaches to regulation, Bank of Russia highlights the trend toward tightening rules in the crypto space. Bank of Russia asserts that CBDCs will be able to respond to the urgent need for secure digital payments.
What do you think about Russia’s plans for the digital ruble project? Comment below.
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