As the retail version of Russia’s central bank digital currency (CBDC) pilot gets underway, lawmakers have expressed a keen interest in a wholesale digital ruble as economic sanctions bite even harder.
According to a report by local news outlet Interfax, Russian deputies at the State Duma are pushing for wholesale CBDC pilots to be carried out alongside retail experiments. The lawmakers’ stance was contained in the recommendations of three separate legislative committees seeking an improvement on the state of payments.
“A timely turn to its own experiment with a wholesale digital currency model would help the Russian Federation not miss out on the benefits of flexibility and adaptability that will be open to as long as wholesale digital money projects of central banks around the world remain in the experimental phase,” read the report.
For the concerned lawmakers, the pivot to wholesale CBDCs will offer Russian financial institutions options to circumvent Western-backed economic sanctions imposed since the start of its invasion of Ukraine. The sanctions resulted in the blacklisting of Russian banks from the SWIFT network, which may have wiped off as much as 2.5% of the Russian GDP.
Russian lawmakers believe that developing a proper wholesale CBDC will allow local banks to settle cross-border transactions without relying on Western-backed infrastructure. Currently, there are plans for deploying wholesale CBDCs in several economic blocs, including the BRICS and the Eurasian Economic Union (EAEU).
Back in 2021, during the early discussions around a digital ruble, a wholesale offering dominated the discussions but gave way to a retail iteration. The prioritization of the retail version of the digital ruble was largely driven by the government’s need to crack down on the “cryptoization” of the local economy and to offer residents the option of new avenues for cross-border transactions.
The Finance Ministry has indicated an interest in participating in the digital ruble pilot, focusing on the use cases for social payments and subsidies for citizens.
Programmable CBDCs on the horizon
Chairman of the State Duma Committee on Financial Markets Anatoly Aksakov has hinted at lacing the digital ruble with programmable functionalities in the coming weeks using smart contracts.
In an interview with Kommersant, Aksakov noted that despite the inherent risks associated with programmable CBDCs, the move could have several benefits for Russian payments, including stifling the activities of money launderers and terrorism financiers.
“Can the state interfere in this process? I admit that this is also possible, although so far we have not yet approached this procedure for using digital rubles,” Aksakov said. “In principle, the state, since everything turns around in the information system of the Central Bank, can establish rules that will prevent payment of unscrupulous external partners, let’s say.”
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.
Watch: Blockchain provides perfect foundation for CBDC
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