Russia intends to perform its first cross border payments using the digital ruble in the second half of 2025. Central bank digital currency (CBDC) transactions with China or Belarus are on the cards. That’s according to Anatoly Aksakov, who chairs the Financial Markets Committee of Russia’s State Duma.
That said, he wasn’t overselling its usage in the early stages.
“Fundamentally, there are few countries that have made serious progress in using national digital currencies. This is why technologically they are simply not ready to launch a digital currency in mutual settlements with other countries. However, I am confident that it will be common practice within five years,” he said, according to state news agency TASS.
He continued, “(The) Chinese have made good progress with (the) digital yuan, China is clear in this sense. Both we and they already have certain experience, which is why with China it would be interesting to launch the process of settlements in digital currencies. Technologically we are quite close. It would also be possible to have a try with Belarus as well since it is a friendly country.”
China has multiple CBDC projects. There’s the digital yuan, the domestic CBDC that has been used for a few international payments. Plus, there’s also mBridge, the cross border CBDC initiative, where China is the software architect. Additionally, there’s some discussion of a BRICS Bridge project, where both China and Russia are BRICS members.
However, before Russia can progress to cross border tests, Russia must get up and running with the CBDC domestically.
Domestic digital ruble progress
On that front, the first phase of pilots started in August 2023, with VTB as the first Russian bank to make transactions. Currently 30 companies in 11 cities support the acceptance of the digital ruble via VTB. For example, some Lukoil gas stations accept the CBDC for fuel and snacks, users can pay for phone or internet access online at Rostelecom, and it’s possible to use the CBDC on the Moscow Metro.
Last week the central bank signed a cooperation agreement with the Mayor of Moscow. It envisages a more widespread rollout of the CBDC in the future for metro travel, parking, and other transport services. Additionally, the Mayor said the city plans to use smart contracts to automate the insurance of its urban transport rolling stock.
Meanwhile, apart from e-commerce and online transactions, users can transfer funds between their bank account and the digital ruble wallet via 14,000 VTB ATMs. The bank also conducted a cross border transaction with Belarus last year, although it was in a test environment.
VTB is one of 13 banks included in the first phase of trials. The second phase will include Russia’s largest bank Sber, the largest digital bank Tinkoff, and another 15 banks. It will also expand the number of focus group participants and retail outlets, add dynamic QR codes, and allow transfers between companies and other legal entities.
“At the next stage of the project’s development, it is important to expand the circle of its participants, especially through legal entities – trade and service enterprises, which could provide additional opportunities for using the digital ruble,” said Vadim Kulik, Deputy President and Chairman of the Board of VTB. “Piloting with a large number of companies will give another impetus to the development of the project and take a fresh look at the key advantages of the national digital currency for clients.”
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