Russian banks are worried they will be burdened with costs when the nation’s central bank rolls out its CBDC, the digital ruble, next year.
The bank last week said that it would release the coin to the public on July 1, 2025.
Digital Ruble Doubts?
The radio broadcaster Avto Radio reported that the First Deputy Chairman of the Central Bank, Vladimir Chistyukhin, told parliamentarians that this would be the day when the CBDC “moves out of its pilot phase” and into “the mass implementation stage.”
Moscow has fast-tracked its CBDC launch, and will likely release its coin nationwide even before its ally Beijing.
With sanctions pressure rising, the Russian Central Bank appears to think that launching its CBDC will let it bypass the USD and global banking messaging networks like SWIFT.
But Russian banks appear concerned about the move. Per RIA Mo, Anatoly Kozlachkov, the head of the Association of Russian Banks, told State Duma lawmakers that Russian banks “are expressing reluctance to switch to the digital ruble.”
Kozlachkov said the “high costs” of adoption were off-putting for many large Russian commercial financial institutions.
U.S. and U.K. authorities have taken action against a money-laundering network accused of helping Russians bypass sanctions using crypto.#Russia#Cryptohttps://t.co/TeZku8cgCu
Kozlachkov added that institutions “are concerned about the possible outflow of liquidity and the costs associated with the CBDC transition.”
Preliminary association calculations show that digital ruble adoption could cost banks an average of 100 million rubles ($963,000) each.
The association chief noted that “some banks with basic licenses” have capital holdings of “less than 300 million rubles ($2.9 million).”
“The proportions of costs for the introduction of the digital ruble should be adjusted, or approaches should be differentiated by taking into account the specifics of [each bank].”
Anatoly Kozlachkov, head of the Association of Russian Banks
The offices of Sberbank in Khabarovsk, Russia. (Source: KonstantinEvstegneev1996 [CC BY-SA 3.0])
Frosty Reception
However, Kozlachkov’s comments appear to have received a frosty reception from senior MPs.
The head of the State Duma’s Committee on Financial Markets, Anatoly Aksakov, said he “did not understand why the banking community” was “criticizing the digital ruble.”
The Russian Central Bank developed its first proof-of-concept started for the digital ruble in 2020.
However, the bank began to accelerate the project after the outbreak of war in Ukraine in February 2022.
Western sanctions have restricted the cross-border operations of most Russian banks. Moscow has since been forced to turn to crypto and other solutions to continue international trade.
But many of its subsequent efforts to find a more sustainable workaround with fellow BRICS members involve the use of digital fiats.
The Central Bank responded by launching its first real-world CBDC pilot to a group of 600 citizens in 11 cities in August 2023.
COMMENTARY: Russia’s shadow fleet could aid Moscow in other ways too — not just oil revenue.https://t.co/zptacK6xVJ
In September this year, the bank expanded this number to 9,000, with 1,200 businesses also joining the pilot.
In recent weeks, a select group of Russian companies has begun using the CBDC to make B2B transactions.
But even back in mid-2023, the bank had already targeted a 2025 rollout. The Central Bank has also warned that businesses will be forced to accept CBDC payments, and will be fined for non-compliance.
Chechnya’s Kremlin-backed leader Ramzan Kadyrov has said he is ready to step in if necessary and ensure that Syria gets the wheat it needs in what he said was the unlikely event that Russian wheat supplies to the country were disrupted https://t.co/vo1FRXQxZF
When the August 2023 pilot launched, major players like Sberbank were conspicuous by their absence.
Sberbank has since joined the pilot’s “second stage.” But, as has been the case with commercial banks elsewhere in the world, Russian banks appear skeptical about CBDCs.
Not All Banks Unsure?
Regardless, many appear to feel they have no choice but to comply with the Central Bank’s wishes, and are rushing to get to grips with the coin.
Earlier this month, 59i, a media outlet based in Perm, reported that Rosselkhozbank has recently conducted its first “operations with the digital ruble.”
A branch of Rosselkhozbank in Moscow, Russia. (Source: Edrko CC BY-SA 4.0)
Rosselkhozbank said that a group of “individual and legal entity clients” used the coin to “buy food and train tickets,” as well as make peer-to-peer transfers.
“The digital ruble opens up a new horizon of opportunities for both the entire financial sector and for each bank client. The mechanics of handling the digital ruble will not differ from [conventional] transactions. We are responding to the requests of our users to make the process seamless and understandable.”
This articles is written by : Nermeen Nabil Khear Abdelmalak
All rights reserved to : USAGOLDMIES . www.usagoldmines.com
You can Enjoy surfing our website categories and read more content in many fields you may like .
Why USAGoldMines ?
USAGoldMines is a comprehensive website offering the latest in financial, crypto, and technical news. With specialized sections for each category, it provides readers with up-to-date market insights, investment trends, and technological advancements, making it a valuable resource for investors and enthusiasts in the fast-paced financial world.
U.S. and U.K. authorities have taken action against a money-laundering network accused of helping Russians bypass sanctions using crypto.#Russia #Cryptohttps://t.co/TeZku8cgCu
