The Central Bank promised in 2023 to start using the digital ruble for real settlements and the execution of smart contracts
In 2023, the Bank of Russia plans to start pilot projects of real-money digital ruble settlements between individuals (C2C), as well as individuals and enterprises (C2B, B2C); in addition, in 2023, a limited number of participants will be given the opportunity to conclude and execute smart contracts on the digital ruble platform, that is, transactions that are automatically executed upon the occurrence of conditions predetermined by the parties, which will optimize business processes related to interaction between counterparties, and also minimize time and costs during the transaction, according to the document published by the Central Bank of Russia “The main directions of the unified state monetary policy for 2023 and the period of 2024 and 2025”.
These same deadlines recallhave been called before.
In 2022 was carried out testing of the digital ruble platform. 12 banks expressed their desire to take part in testing the platform: Ak Bars Bank, Alfa-Bank, DOM.RF Bank, VTB, Gazprombank, Tinkoff Bank, Promsvyazbank, Rosbank, Sberbank, SKB-Bank, Soyuz Bank, TKB.
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In 2024, the Bank of Russia plans to start gradually connecting all credit institutions to the digital ruble platform, increase the number of available payment options and transactions using smart contracts. As the Federal Treasury is ready, payments using digital rubles will become available both in favor of the state and from the state in favor of individuals and enterprises (С2G, B2G, G2C, G2B). The Bank of Russia will cooperate with other central banks developing their own digital currencies to carry out cross-border and foreign exchange operations with digital currencies. In 2025, the Bank of Russia plans to implement an offline mode of the digital ruble, connect non-bank financial intermediaries, financial platforms, and exchange infrastructure. The phased process of introducing the digital ruble will give market participants the opportunity to adapt to new conditions.
Central Bank on what is a digital ruble
In terms of its properties, the digital ruble will be similar to both cash and bank account balances. First of all, digital rubles, like cash, will be an obligation of the Bank of Russia. However, the Bank of Russia will issue them only in digital form, which is typical for non-cash funds of banks. The introduction of the digital ruble will provide a number of benefits, including increasing the availability of financial services, including in remote and hard-to-reach areas; the ability to gain access to a digital wallet through any financial institution, as well as with limited access to the Internet; development of a new payment infrastructure.
However, most importantly, the third form of the Russian ruble will optimize the cost of settlements. This will reduce transaction costs and support the competitiveness of the Russian economy. This is of particular relevance in the context of the growing digitalization of payment services and the spread of digital national currencies in other countries. Also, the introduction of the digital ruble will make it possible to implement the “coloring” technology. This means that it will be possible for digital rubles to choose the target direction of use – for example, the types of goods and services for which it will be possible to pay with “colored” digital rubles. As a result, the efficiency of targeted public spending will increase, including within the framework of public procurement and government contracts. “Colored” digital rubles will be the same component of the money supply as regular digital rubles and cash, and will be used in the calculations on an equal basis with them.
The introduction of the digital ruble and the flow of funds from customer bank accounts to digital wallets on the platform of the Bank of Russia do not pose risks to financial stability.
Notethat in India in November an experiment began on the implementation of settlements in digital rupees between financial institutions. In particular, the digital rupee is used to make transactions in the secondary market for government securities. This should reduce the transaction costs of the parties, according to the Central Bank of India.
In China, the Bank for International Settlements conducted an experiment on the cross-border use of the digital yuan. In total, the bank has carried out more than 160 cross-border transactions worth over $22 million (1.3 billion rubles). Settlements were made with clients from Thailand and the UAE.
What else is the Central Bank of Russia planning in terms of digital technologies
The Bank of Russia also announces that it considers it necessary to continue developing approaches to regulation ecosystem business. To maintain a competitive environment, it is planned to provide for the possibility of introducing increased requirements for dominant participants, whose share will exceed the regulatory threshold in key segments of the digital market. The speed of implementation of regulation should depend on the level of “platformization” of a particular sector, its social and economic significance. It is noted that it is important to continue the implementation of state support measures for information technology industries, regardless of whether the company is part of the ecosystem of a bank or a technology company. At the same time, it is necessary to introduce non-discriminatory rules for activities on the Russian market of foreign platforms.
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It is planned to further develop the payment system “World”, including the international promotion of Mir cards, the development of the functionality of the fast payment system (SBP) for citizens through the simplification of the client path, increasing the availability and expansion of the system services and the SBP for business through the introduction of an agency scheme for connecting enterprises to the SBP. The introduction of the functionality of cross-border transfers is being worked out, primarily in the EAEU space.
The document also refers to the development unified biometric system”The expansion of biometric data registration mechanisms and the application of the system will contribute to the digitization of financial, non-financial and government services.”
It was said about the need to continue work on creating favorable conditions for development digital financial assets. It is planned to continue improving regulation in this area, including for use in cross-border transactions.
The Bank of Russia, together with interested state bodies, will implement a set of measures for import substitution of software and equipment in the financial sector.
