Russia Will Use CBDC Pay Benefits, Experts Claim

According to Russian specialists, they believe that the authorities will utilize the digital version of their currency, known as the digital ruble, as a means to distribute state welfare payments. Additionally, they speculate that this central bank digital currency (CBDC) could potentially be employed as a method to bypass imposed sanctions.

As Russia prepares to launch the coin in a few days, specialists have been closely analyzing the limited information that has been provided before August 15th.

Although the initial pilot experiments will focus on small payments, adding funds to the wallet, and debiting directly, analysts believe that the Central Bank has more ambitious intentions for the digital currency.

According to RIA Novosti (via Progoroduhta), Pavel Kashitsyn, a high-ranking staff member at Expert RA, the oldest credit rating agency in Russia, estimates that it will be approximately three years until the majority of individuals can engage in a substantial portion of their financial transactions using the CBDC.

However, some individuals held a more positive outlook.

Yegor Krivosheya, the chief of Skolkovo, a company specializing in blockchain and fintech solutions, expressed his certainty that the digital ruble will be employed for conducting official transactions.

The pilot program of the Central Bank of the nation is scheduled to commence on August 15th, involving a group of 600 individuals who will be the inaugural users of the country's CBDC.

The financial institution intends to collaborate with merchants in eleven cities across the country, and even the renowned metro system in Moscow will be participating in the experimental phase.

Around 30 retailers and 13 banks are participating in the initial trials.

However, another set of approximately 16 banks, including certain local banks, are scheduled to participate in a subsequent stage within the upcoming months.

Is Digital Ruble Popular Among Russian Businesses?

Krivosheya also mentioned that government bodies might employ the coin for remunerating contractors involved in tender agreements.

According to him, governmental entities will strive to utilize the currency for disbursing various benefits to individuals, such as state pensions.

According to industry professionals, the CBDC might prove valuable in the realm of business, particularly in the field of project financing. In this sphere, it becomes crucial for various stakeholders to retain authority over the allocation and utilization of funds.

Specialists further emphasized that the Central Bank Digital Currency (CBDC) could potentially facilitate cross-border transactions, a sentiment previously expressed by senior lawmakers in Moscow.

Members of Parliament (MPs) from both Russia and Belarus have proposed that the electronic ruble has the potential to facilitate the transfer of money between Moscow and Minsk and their nearest political partners.

According to financial professionals, the urgency for a cross-border CBDC has intensified as a result of sanctions and the restricted availability of the SWIFT banking system for Russian businesses.

Will Russia's CBDC Overcome Challenges In Paying Benefits?

So far, the strategies of Russia seem to share similarities with China's plans to adopt the digital yuan. Both countries started pilot operations in approximately twelve cities at the same time and then slowly expanded.

Nevertheless, the road may not be all smooth sailing for the Russian Central Bank.

Executives and financial institutions in the business sector have raised various apprehensions regarding the cryptocurrency.

And it seemed that other specialists were perplexed as to why Sberbank, one of the largest financial and IT companies in Russia, withdrew from the digital ruble experiment.

Both Sberbank and its nearest competitor Tinkoff Bank were scheduled to participate in the initial stage of the pilot.

However, according to a report on Newsua.ru, Sberbank and Tinkoff withdrew without disclosing the rationale behind their decision.

The blog section was written by reporter Alyona Vinogradova.

It remains unclear if Sberbank plans to incorporate the digital ruble into its system in the near future, or if it will disregard this form of currency until there are legal obligations to accommodate the token.

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