• Russia is pushing for the integration of Central Bank Digital Currencies (CBDCs) to replace SWIFT, a popular financial network messaging system.
• The CBDC will be designed as a hybrid formula which integrates centralized and blockchain solutions.
• Russia is also looking into alternatives like Bitcoin (BTC) for cross-border transactions.
Russia Seeks Alternative Payment Options
First Deputy Governor of the Bank of Russia Olga Skorobogatova believes that the integration of Central Bank Digital Currencies (CBDCs) has the potential of replacing SWIFT, a popular financial network messaging system. This would mean that payments and other information on these CBDCs would be carried out on another settlement infrastructure entirely different from the one currently utilized. Since its invasion of Ukraine, Russia has been seeking alternative payment options to evade Western sanctions.
Digital Ruble Adopts Hybrid Formula
The intended CBDC will be designed to possess cross-border features to facilitate international trade. Speaking of technicalities, the CBDC will adopt a hybrid formula integrating centralized and blockchain solutions. While there is an immediate need for this payment option, Skorobogatova has confirmed that the project will be carried out in phases.
Alternative Payment Options Consideration
Russia is now putting effort into developing and rolling out its national digital currency, a digital Ruble. At one point, the country was considering the option of accepting payments in Bitcoin (BTC) for the sale of its oil and gas from “friendly” countries like China and Turkey. From that time till now, Skorobogatova has demonstrated a high level of confidence in Russia’s capacity to circumnavigate the existing payment embargo through alternative means.
Pilot Phase Similar To China’s Digital Yuan
Russia plans to design the digital Ruble like China’s digital Yuan, hence their pilot phase would be similar. Unlike some other nations who promoted their CBDCs usage by using them for payment in their government parastatals, Skorobogatova claimed that Russia would not resort to such a strategy while also comparing it to the Russian card payment system known as Mir. Specifically, she confirmed that the government will not pay employees salaries with the digital Ruble to stimulate its usage .
Will Bitcoin Overpower CBDC?
Despite growing sentiment towards Central Bank Digital Currencies (CBDCs), experts believe Bitcoin might be better used for cross-border transactions due to its decentralized nature and global acceptance among users . It remains unclear whether or not Bitcoin can overpower CBDCs but we can only wait to see what happens when these projects are launched .