The central bank of the Russian Federation is exploring its options when it comes to launching a central bank digital currency, or CBDC.
That’s per Governor of the Bank of Russia Elvira Nabiullina, who confirmed in comments over the weekend that the institution was interested in developing a CBDC underpinned by “distributed registries,” i.e. blockchain.
The governor noted that the bank had no immediate project in the works but was in the middle of seriously considering how, why, and when a Bank of Russia-backed blockchain currency could be created.
Nabiullina said such “electronic money” would “be more convenient […] for people,” but she also suggested the general public may not be ready to leave physical cash behind yet because of one of cash’s biggest strength, privacy. (Notably, the central bank could use tech akin to EY’s Nightfall protocol and JP Morgan’s Anonymous Zether tool to improve a blockchain system’s privacy, but that’s another matter.)
In her new remarks, Governor Nabiullina said her bank was just one among several central banks who were currently exploring CBDCs. She added it will be key for these institutions’ specialists to discern if such currencies really can outperform fiat payment rails.
The chatter is only the latest development showing how Russia’s top financial authorities are seemingly warming to the idea of blockchain payments.
For one, Governor Nabiullina seems to have come around on the nuanced possibilities of blockchain tech. In May, the Bank of Russia chairwoman said she and her peers didn’t think “cryptocurrencies could act as monetary surrogates” in a state-backed context.
Those May comments came over the central bank’s duty to review a proposal put forth by the Duma, Russia’s lower parliamentary chamber, to create a CBDC underpinned by gold reserves.
The Cryptoruble Stablecoin
A separate proposal to create a “cryptoruble” stablecoin had been put forth in the Duma last year, though such a token would likely face volatility issues if created any time soon — the ruble neared the status as the world’s most volatility currency in 2018.
Moreover, last December Russia’s deputy finance minister Alexey Moiseyev confirmed the country was coordinating with the other four member states of the Eurasian Economic Union (EEU) on the creation of a digital currency for the bloc. Moiseyev said the project could be actualized as early as 2020 and came as a way for the EEU nations to be able to bypass U.S. economic might, e.g. sanctions.
Weeks prior to Moiseyev’s comments, Russia’s former Minister of Energy and current head of the Energia corporation Igor Yusufov called for leaders in the nation to embrace an oil-backed cryptocurrency that could be used as a means to improve trade possibilities.
“Hypothetically an oil-backed cryptocurrency would allow oil producing countries to avoid any financial and trade restrictions that have become excessive in recent years,” Yusufov said at the time.
Accordingly, some of Russia’s most influential figures have blockchain tech on the brain. In all cases, these figures’ resulting ideas are being driven by the prospects of giving Russia new economic advantages.
Gaining an advantage is why Russia’s state-owned oil and gas powerhouse Gazprom announced earlier this year that it had developed a blockchain prototype that could help the enterprise optimize and digitize its operations, namely its gas supply processes. The system’s smart contract infrastructure was designed with a mind toward automating the execution of real-world contracts.
The spate of activity coincides with the Russian government’s ongoing effort to craft a comprehensive federal law to regulate Russia’s nook of the cryptoeconomy. The long-awaited draft bill seeks to legally define jargon like “tokens” and “Initial Coin Offerings” for Russian users and businesses, among rendering more stringent requirements.
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