Russia’s version of a CBDC is being tested by banks for international settlements. It is expected that the development will be completed by the beginning of next year. Russia is currently in the pilot phase for its central bank digital currency (CBDC) development. New reports suggest that Russia could use its national currency to settle international trade.
A report published by Reuters claims that Russia plans to use the digital rouble to settle mutual disputes with China within the next year. The digital rouble, which is currently being used to settle with banks, is expected to be complete by the beginning of next year.
Russia will settle payments with China with its CBDC by next year
In the third week in September, the United States Treasury Department added 22 people and two Russian-based entities onto the sanction list. The country is actively seeking alternative financial routes and trade settlements in light of increasing sanctions against Russia by the West following the conflict with Ukraine.
Anatoly Aksakov (head of Russia’s finance committee) recently acknowledged that Russia is less accessible to the international market due to the geo-political crises. They have been working hard to find alternate payment and trade settlements. At the moment, national digital currency seems like the best option. He stated,
The topic of digital assets, the digital ruble, and cryptocurrencies is currently intensifying in society as Western countries impose sanctions and create problems for bank transfers, international settlements, and for banks to transfer money.
Many countries are now in the final stages of launching a CBDC
Russia is now part of the growing number of countries in the final phase for their CBDC development. According to the latest monetary policy update by the Bank of Russia, the authority will connect all credit institutions and banks to the digital currency platform in 2024.
Within a week of reports indicating possible crypto use in cross-border payments, reports have emerged about the use of digital rouble to settle mutual trades on the international trade market.
Russia passed a crypto law in 2020 that prohibited cryptocurrency as a method of payment. However, it didn’t prohibit other crypto-focused activities like mining and crypto trading.
Russia’s national digital currency has been used as an exchange medium to reduce U.S. dominance on the international market because of the increasing number of sanctions and the uncertainty surrounding international trade.