Russia’s central bank plans to convert the digital ruble into foreign currency that can be used by non-residents. In a document dedicated to digitizing the Russian financial sector, the regulator reiterates its concern about the risks associated with cryptocurrencies and insists that digital coins issued by the state are safer.
The Bank of Russia will give foreigners access to its CBDC
The Central Bank of the Russian Federation (CBR) will facilitate the exchange of the digital ruble for foreign currencies and will allow users residing outside its jurisdiction to open and use digital ruble wallets. The monetary authority revealed these intentions in its recently published project “Main guidelines for the digitization of the financial market, 2022 – 2024”.
The Bank of Russia began considering a central bank digital currency (CBDC) in 2018 and decided to explore the possibility of issuing one last year. In October 2020, a consultation document was published to gather feedback from financial sector stakeholders. In April 2021, the regulator released a digital ruble concept that describes its core architecture.
In June, CBR formed a pilot digital ruble group with more than a dozen banks and other interested parties. The authority wants to complete the prototype of the platform by the end of December and start testing with CBDC in January. It plans to gradually expand the range of participants and transaction types, Forklog and RBC said, citing the draft.
In the first test phase in 2022, the Bank of Russia will invite credit bureaus and conduct consumer-to-consumer transactions. The federal treasury will enter the second stage, together with financial intermediaries such as non-bank payment service providers, stock exchanges, brokers, marketplaces and insurance companies.
Smart contracts and offline mode will also be introduced, as will the ability to convert digital rubles into foreign currencies. The CBR claims that the offline use of the digital ruble will increase the availability of financial services to the population. He says a flat fee will reduce transaction costs. The platform will also be used for specific payments to citizens and businesses.
In the document, the Russian central bank again drew attention to the risks it sees in decentralized digital currencies such as bitcoin. The CBR reiterates its position that cryptocurrencies cannot be used as a means of payment due to their high volatility.
However, recognizing that there are different approaches to regulation, the bank highlights a trend towards stricter rules related to the cryptographic space. The Bank of Russia also insists that CBDCs can meet the need for secure digital payments.