• Russia is working on a digital Ruble to be used for cross-border payments and potentially replace SWIFT.
• The CBDC will adopt a hybrid formula, combining centralized and blockchain solutions.
• Russia plans to test the digital Ruble as it seeks alternatives to Western sanctions.
Russia Develops Digital Ruble
The Bank of Russia is pushing for its national Digital Ruble, which has the potential of replacing SWIFT as a payment system for international transactions. The CBDC would combine centralized and blockchain solutions and would require countries interested in using it to have an operational agreement in place.
Motivation Behind Development
The development of the digital Ruble comes from the need for alternative payment options due to Western sanctions placed on Russia after its invasion of Ukraine in 2014. As such, Russia has been exploring different options that could act as a workaround for this issue, including accepting payments in Bitcoin (BTC) from “friendly” countries such as China and Turkey.
Testing Process
In line with other countries rolling out their own CBDCs, Russia plans to use a similar testing process that will involve limited usage at first before its eventual full launch. Additionally, Skorobogatova confirmed that the government would not pay salaries with digital Rubles to stimulate usage, unlike some other nations who have done so with their CBDCs.
Competition With Bitcoin?
Despite the growing popularity of Central Bank Digital Currencies (CBDCs), experts believe that Bitcoin might still be better suited for cross-border transactions than these state-sanctioned currencies. This is because Bitcoin offers more privacy than most CBDCs due to its decentralized nature and lack of control by any government or central bank authority.
Conclusion
Overall, while Central Bank Digital Currencies offer new opportunities for governments looking to facilitate trade between countries or bypass economic sanctions, there are still concerns about privacy when compared with decentralized cryptocurrency like Bitcoin (BTC). However, only time will tell whether these new forms of money will become widely accepted across borders or if it’s advantages over cryptocurrencies will remain limited by their centralization and control by authorities
