Russia to Start Work on CBDC Settlement System as Sanctions Endure

The country’s central bank will start concentrating on two possible cross-border CBDC settlement models this quarter.

Russia’s central bank is reportedly set to start fostering a cross-border settlement system utilizing a central bank digital currency (CBDC) amid ongoing sanctions because of its invasion of Ukraine.

The plans to push ahead with Russia’s digital ruble are supposed to come in the first quarter of 2023 and will see Russia’s central bank concentrate on two possible cross-border settlement models, according to a Jan. 9 report by local news source Kommersant.

The first proposed model sees different countries going into separate bilateral concurrences with Russia to integrate their CBDC systems.

Every arrangement would be made to guarantee the conversion and move of assets between the countries are as per the guidelines of the arrangements.

The second, more complicated model proposes a solitary hub-like platform for Russia to cooperate with different countries, dividing common protocols and norms to facilitate payments among the connected countries.

Roman Prokhorov, the head of the board of the Financial Innovations Association (AFI) believed that the first model was more easy to execute however less encouraging for bilateral communications between countries.
The other choice was more “cutting-edge” and he considered an underlying two-way system might be executed, with China as the most probable accomplice given its “technological and political status.”

Reports in September claimed that Russia was planning to involve its digital ruble for settlements with China by at some point in 2023.

All things considered, others accept Russia’s CBDC play will not be hamstrung by technology, yet rather by governmental issues.

The VP of the Association of Banks of Russia, Alexey Voylukov, said that presenting a digital ruble won’t change or work on Russia’s global political situation, and preliminaries for the CBDC platform must be embraced with countries that are cordial withthe Russian government and technologically prepared.
Already, the Bank of Russia said it was hoping to carry out its digital ruble by 2024, with all banks and credit foundations connected to the CBDC’s platform.

Russia has confronted mounting financial and trade sanctions since its escalation of the Russo-Ukrainian conflict when it launched a full-scale invasion of Ukraine in late February 2022.

It’s since tried and contemplated ways of skirting the sanctions, for example, the central bank considering the utilization of cryptocurrencies in the country “just to help foreign trade.”

The Bank of Russia and the Ministry of Finance came to an understanding in September on a standard allowing Russians to send cross-border payments utilizing Crypto.