04-01-2025 
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Russia is accelerating the development of its central bank digital currency (CBDC) and is set to commence testing in the western region of Tatarstan.
The Bank of Russia approached the Tatarstan leadership recently, proposing to pilot the digital ruble in the region, local news outlet Business Gazeta reports. Tatarstan’s Ministry of Finance has since formed a working group to explore the mechanisms of a digital ruble in the region, which maintains great autonomy despite being a federal subject of the Russian government.
According to the ministry, the key feature to be tested in the pilot is smart contracts. In particular, the central bank will explore “experimental conditional spending of targeted funds for certain purposes,” better known in digital asset circles as programmability.
While common with decentralized blockchains, programmability has emerged as a controversial feature with CBDCs. Critics argue that it allows the government to control the spending of its people, which denies CBDCs the same bearer instrument quality that cash intrinsically enjoys.
With central banks selling CBDCs as “just like cash, but digital,” programmability has become an Achilles’ heel that some central banks have been forced to denounce.
For instance, European Central Bank (ECB) board member Fabio Panetta clarified that “the digital euro would never be programmable money.” The Bank for International Settlements (BIS) has also warned against programmability as it could compromise the core function of money.
However, some countries remain open to CBDC programmability. China’s digital yuan and Kazakhstan’s digital tenge are among those exploring this feature.Russia also remains committed to a programmable digital ruble. In Tatarstan, the government intends to monitor the targeted spending of the conditional subsidy from the region’s budget with the CBDC.
“…the digital ruble test platform will independently track transactions within the established rules,” said the ministry, with the pilot set to kick off in Q3 this year.
While it pushes on with the pilot testing, Russia has slowed down its planned aggressive rollout of the digital ruble. Initially, the central bank intended to launch the token in mid-2025. However, retailers and banks have been up in arms over the timeline, indicating they need more time to set up systems and train staff.
In December, one banking association claimed that each bank would incur at least $1 million to set up the new CBDC systems. They also expressed concern that the lack of a holding cap could lead to disintermediation.
The Ministry of Industry and Trade has also petitioned the Bank of Russia for an extension, stating that retailers are not ready for the CBDC. It requested for a two-year period to allow merchants to integrate the digital currency as a payment method.
While the CBDC may be delayed, digital assets are quickly finding their place in cross-border payments for Russian firms. Reuters reported a week ago that Russian oil companies were conducting payments in digital assets with their Chinese clients as sanctions continue to bite.
Watch: Finding ways to use CBDC outside of digital currencies
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