Russia Will Use CBDC Pay Benefits & Evade Sanctions, Experts Claim
Russian experts say they think that the government will use the digital ruble to pay state benefits – and think the CBDC could be used to evade sanctions.
With just days to go until Russia pilots the coin, experts have been examining the scant details that have thus far been forthcoming prior to August 15.
While the initial pilot tests will revolve around micropayments, wallet top-up functionality, and direct debiting features, experts think the Central Bank has much grander plans for the coin.
Per the media outlet RIA Novosti (via Progoroduhta), Pavel Kashitsyn, an executive at Expert RA, Russia’s oldest credit rating agency, it will take around three years before most citizens are able to perform a significant amount of their financial activities with the CBDC.
But others were more optimistic.
Yegor Krivosheya, the head of the blockchain and fintech firm Skolkovo said he was “confident” that the digital ruble would be used to make government payments.
The United States will allow administrative transactions involving Russia's central bank, National Wealth Fund and Ministry of Finance until 12:01 a.m. on Nov. 8, according to the Department of Treasury's website on Thursday.#CGTNAmerica
— CGTN (@CGTNOfficial) August 10, 2023
The country’s Central Bank will launch its pilot on August 15, with 600 citizens set to become the first people in the country to use the CBDC.
The bank will partner with retailers in 11 cities nationwide, with the capital Moscow’s iconic metro system also joining trials.
Some 30 retailers and 13 banks are taking part in the first trials.
But a second group of about 16 banks, including some regional banks, is set to join a “second phase” in the coming months.
Digital Ruble: Russian Businesses Keen to Use Coin?
Krivosheya added that government organs were likely to use the coin to pay contractors in tender agreements.
He said state organizations would seek to use the coin to pay citizens’ benefits, including state pensions.
In the business world, experts suggested, the CBDC could be “useful in the project financing market,” where parties needed to keep “control over the use of funds.”
Experts added that the CBDC could “also be used to make cross-border transactions,” echoing statements made by senior Moscow lawmakers.
MPs both in Russia and Belarus have suggested that the digital ruble could allow Moscow and Minsk to make and receive cross-border payments with their closest political allies.
And the financial experts concluded that the need for a cross-border CBDC had become more pressing “due to sanctions and [Russian firms’] limited access to the SWIFT banking network.”
Russia May Use CBDC to Pay Benefits – But Can It Overcome Challenges?
Thus far, Russia’s plans appear similar in many ways to China’s digital yuan adoption plans, which also saw pilot operations begin in around a dozen cities simultaneously, before expanding gradually.
However, it may not be all plain sailing ahead for the Russian Central Bank.
Business chiefs and Russian banks have expressed a range of concerns about the coin.
And other experts appeared to be puzzled as to why Sberbank, one of Russia’s biggest financial and IT firms, dropped out of the digital ruble pilot.
Both Sberbank and its closest rival Tinkoff Bank had been due to join the pilot’s “first phase.”
But Newsua.ru reported that Sberbank and Tinkoff dropped out for “unknown reasons.”
Journalist Alyona Vinogradova wrote:
“It is still unknown whether Sberbank is going to introduce support for the digital ruble in the near future, or whether it will completely ignore this means of payment until it is legally required to provide support for the token.”
