Russia to initiate work on CBDCs to facilitate cross-border payments amid sanctions
The Russian central bank plans to conduct a study on cross-border CBDC settlement in the wake of current economic and commercial sanctions against Russia for invading Ukraine.
Highlights
- In light of ongoing sanctions, Russia intends to research two settlement system models
- The first model will be in charge of regulating nations' bilateral agreements with Russia regarding the integration of their CBDC systems
- The second approach suggests creating a single hub-like platform for connecting Russia with other countries
According to a report, Russia's central bank, The Central Bank of the Russian Federation, is getting ready to start developing a cross-border settlement system utilising a central bank digital currency (CBDC) despite the continuous sanctions imposed on it for waging war against Ukraine.
According to a local media publication, Kommersant, the country's central bank is studying two possible models of the settlement system, which it plans to introduce in the first three months of 2023. In other words, the Russian central bank is investigating two possible cross-border, settlement models as part of its plan to introduce the digital ruble in the first quarter of 2023.
As per the proposal, the first model takes into consideration the signing of various nations' individual bilateral agreements with Russia in order to connect their CBDC systems, therby ensuring that currency conversions and transfers between countries take place according to the rules of the agreements.
The second model, perhaps more complex than the first, provides Russia with a single hub-type platform to communicate with other countries, sharing common protocols and standards to facilitate payments between connected countries.
Original model simpler, but less effective in cross-border communication
According to some industry experts, the first model is simple and much easier to implement compared to the second. However, it is less effective in cross-border communication.
Russia reportedly intended to introduce its digital currency by 2024, but the country has been subject to a number of economic and commercial sanctions as a result of its invasion of Ukraine.
