Russia’s central bank said it plans on having a digital ruble prepared by next year, as part of the country’s effort to circumvent Western sanctions.
Bank of Russia Governor Elvira Nabiullina told the nation’s lower house of parliament that a central bank digital currency capable of international settlements would be possible by next year.
“The digital ruble is among the priority projects,” said Nabiullina. “We have fairly quickly created a prototype… now we are holding tests with banks and next year we will gradually have pilot transactions.”
Stressing the importance of the digital currency, the First Deputy Chairman of the Bank of Russia Olga Skorobogatova said that necessary tests would be performed this year without delay, despite the hesitation of a few Russian banks to participate in the CBDC pilot project.
Along with many other countries around the world, Russia had been developing a central bank digital currency to expedite payments and modernize its financial system. Now, with the onset of Western sanctions imposed as a reaction to Russia’s invasion of Ukraine on Feb 24, Russia has been prioritizing alternative ways of participating in the global financial system.
Besides the digital ruble, Nabiullina also said Russia aims to expand the number of countries willing to accept MIR banking cards administered by the central bank. As part of the Western sanctions, not only have most Russian banks been targeted, but international operators, such as Visa, Mastercard and PayPal have suspended their services in Russia.
In addition to the MIR banking cards, China’s UnionPay is proving one of the few ways Russians can make payments abroad.
Crypto exchanges closing
Although cryptocurrencies theoretically offer a means of making international payments independent of any centralized authority, major exchanges on which they are traded are increasingly closing their doors on Russian clients.
Earlier this week the world’s largest cryptocurrency exchange by volume, Binance, announced that it would be restricting accounts of Russian nationals and companies based there holding over €10,000 in value. While still able to withdraw their funds, affected users would no longer be able to make new deposits or trade.
Recently U.K.-based crypto exchange EXMO made a similar move, restricting access to Russian and Belarusian users, in addition to selling off its businesses in those countries.
While Binance was imposing limitate as part of the EU’s new round of sanctions targeting crypto assets, EXMO said continuing to operate in these “high-risk markets” would threaten its global expansion plans.