According to a report, Russia’s central bank is conducting a pilot test on the digital Ruble. The project involves the use of the CBDC with twelve different banks.
Also, the country would begin consumer pilot testing in 2023 instead of 2024. The government is hastening efforts to develop an international payment system to bypass SWIFT restrictions.
Russian news media CBR stated that the CDBC might become operational next year. Also, the central bank noted that the roadmap for the launch would be available by then.
Olga Nikolaevna, Deputy Governor of Russia’s central bank, stated that:
“The digital Ruble would solve the issue with SWIFT. We would be able to make international payments across borders.”
Russia’s Central Bank: More Countries To Embrace Digital Currencies
Furthermore, there are speculations that China’s digital Yuan would be part of the system. Since 2020, China has been running pilot tests on its e-CNY.
Previously, there were also rumors that Russia would switch to China’s payment system. However, it appears Russia is working on its own payment system.
“In 2023, we shall begin working on the digital Ruble’s interoperability. This would make the CBDC usable on several platforms. We would also know the platforms that are not compatible with the digital Ruble,” the governor added.
Russia began this pilot program in June last year. The main driving force was to solve the overdependence on bank holdings.
However, the SWIFT restriction has prompted the central bank to speed things up. Also, the banks testing the use of digital currencies are developing tremendously.
According to Nikolaevna, about half of them have made quick advancements. This shows that the integration of digital currencies into the banking system would be fast.
Additionally, Russia’s central bank believes that a lot can change in three years. Several states would have embraced digital currencies.
Fragmentation of International Payments
Although using the digital Ruble is a great move, there are some complications. It could lead to fragmentation of International payments.
This will occur if more nations begin to bypass the SWIFT international payment system. Meanwhile, only a few states were banned from using SWIFT.
One of the avenues they may use to do so is through a CBDC. The effect of such action is an increase in expense and complexity.
Furthermore, there would be difficulty in making all CBDCs compatible. To this effect, several countries are working on a pilot program.
The countries involved in this project are China, Thailand, the United Arab Emirates, and Hong Kong. Also, the BIS (Bank for International Settlements) is part of the project.
These countries are working together to create multi-CBDCs (M-CBDC). This would make international payments faster, integrated and secure across borders.
Another project on a multiple CBDC is the Project Dunbar. Participants in this project include the central banks of South Africa, Malaysia, Singapore, Australia, and the BIS.