Russia has postponed its central bank digital currency (CBDC) pilot indefinitely, which was originally scheduled for April 1, as it awaits specific legislation to be voted before the “crypto ruble” trial.
According to a report by state-owned news agency TASS, a regulatory framework is expected to be enacted by early May after only passing through the first reading in in the State Duma, the lower chamber of the Russian parliament.
Anatoly Aksakov, who heads the State Duma committee on financial markets, said that number of private banks participating in the pilot has also changed from 15 to 13.
The Bank of Russia announced in February plans to roll out the first real-world pilot for the digital ruble in April 2023 instead of 2024, as the nation fast-tracks plans to circumvent Western sanctions. Thirteen banks and select merchants have been qualified to participate in the trials of the central bank digital currency (CBDC).
Like other regulators, the Bank of Russia will restrict the amount of CBDC available to limit the flight of commercial bank deposits to the digital version. Instead, it intends to roll out the digital ruble gradually and believes that the underlying demand will depend on ease of use, transaction costs, and the ability to convert the funds.
To avoid a significant reduction in banking system’s liquidity, the central bank said the interest on deposit will remain attractive to consumers compared to the non-interest-bearing digital ruble. Following the first pilot stage, Bank of Russia would indicate the number of general customers that would be able to participate and also stands ready to introduce limits on the amounts of digital rubles that a wallet can hold.
The deputy governor floated the idea of cross-border integration with the digital yuan and the central bank digital currencies (CBDCs) of other friendly countries.
Due to the economic consequences resulting from the sanctions, Russia has started to work on a new monetary and financial system for the country. Part of this is to develop a commodity-backed stablecoin that will be pegged to recognized assets like gold, so the value is clear and observable for all participants.
Elsewhere, Russia was reportedly in discussions with Iran to develop a new gold-backed stablecoin as sanctions from US and its allies amount against the two countries.
A gold-backed ruble stablecoin will allow Russia and Iran to peg the international gold rate instead of a fiat currency. The digital currency would also allow other countries to exchange this coin amongst themselves without external participation in transactions.
