As Russia goes through the pain of Western economic sanctions, banking executives are scrambling for solutions to improve settlements in the country using blockchain technology.
Local news outlet Interfax reported that the country’s largest commercial bank Sberbank is exploring blockchain options for settling payments, given the range of benefits it offers. Alexander Vedyakhin, First Deputy Chairman of the Board of Sberbank, remarked that distributed ledger technology (DLT) is the future of the banking industry, and Russian banks have the chance to be pioneers in using the technology to improve their offerings.
“It is the blockchain technology that will solve this issue, because it is a distributed ledger, there is no single decision point, there is no center, there is no switch that can be turned off, everyone records everything, there are special protocols that allow do it confidentially,” Vedyakhin said.
The banking executive reeled out other benefits of infusing blockchain with banking processes, saying that its speed will allow the financial institutions to “process a large number of transactions.” Vedyakhin added that the features of immutability and confidentiality give DLT an edge over present-day banking systems.
Sberbank is currently wrapping up its plans to launch a decentralized finance (DeFi) platform offering its customers a new range of financial products and functionalities. At the moment, the project is in the private beta stage, with a tentative launch date scheduled for April 2023.
Sberbank’s exploration of DLT comes months after the majority of Russian banks were kicked off the SWIFT platform as part of economic sanctions against the country for the Ukrainian invasion.
With the support of the state
Russia’s government is changing its previously hard stance toward digital currencies and blockchain to actively support innovation in the industry. Both the central bank and the Ministry of Finance have declared support for using stablecoins in settling international transactions.
The banking regulator has taken things up a notch by speeding up the development of its central bank digital currency (CBDC), based on DLT, which it says will be equipped with cross-border payment functionalities. Legislators are currently scrambling to pass a legal framework to guide the mainstream use of digital assets as the state attempts to circumnavigate the sanctions.
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