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The Bank of Russia is formally exploring options for a central bank digital currency, which would create a “digital ruble” as a supplement to cash, according to reports emerging from Russia.
The central bank has joined the international race towards a central bank digital currency, or CBDC, which would ultimately result in issuing rubles on the blockchain, effectively combining the benefits of digital currency payments with a central bank-backed fiat equivalent.
The bank has begun a consultation process on the plans, which will take in views from the financial sector and other stakeholders, before beginning to formulate a policy direction. While plans are thought to be at an early stage of development, the measures could ultimately see the bank bringing forward a digital currency, at a time when central banks around the world are considering similar moves.
Central bank digital currencies are issued either for use within the banking sector for interbank settlements and liquidity, for business or for retail and consumer use. Working in much the same way as regular cryptocurrencies, CBDCs could ultimately allow users access to quick, low cost payments, including cross-border, delivered on a blockchain.
China is thought to be among the most advanced in its plans for a digital yuan, though development work is already underway at a number of other major global central banks, including the Bank of England, the European Central Bank and the Federal Reserve.
The announcement brings Russia in line with these countries in exploring the technology, though the Bank of Russia has said it is yet to decide whether to launch a CBDC of its own.
The matter is now open for consultation “with the financial sector, the expert community as well as with all stakeholders,” over the benefits, risks, process and timing of any eventual CBDC launch.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
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