Russia is in the pilot phase of its central bank digital currency development (CBDC), and new reports indicate that the country could use its national digital currency to settle international trade.
According to a report published in Reuters, Russia is reportedly planning to use the digital rouble for mutual settlements with China by next year. The digital rouble is currently being tested for settling with the banks and is expected to be completed by early next year.
The United States Treasury Department added 22 individuals and two Russia-based entities to the sanction list in the third week of September. With the growing sanctions against Russia from the West in the wake of the ongoing conflict with Ukraine, the country has been actively looking for alternate financial routes and trade settlements.
Anatoly Aksakov, head of the finance committee in Russia’s lower house of parliament, recently admitted that the geo-political crisis has limited Russia’s accessibility to the international trade market. This is why they have been actively working for alternate modes of payment and trade settlements, and national digital currency seems to be the primary choice at the moment. He said:
“The topic of digital financial assets, the digital rouble and cryptocurrencies are currently intensifying in society, as Western countries are imposing sanctions and creating problems for bank transfers, including in international settlements."
Russia has joined the growing list of countries that are in the final phase of their CBDC development. According to the Bank of Russia’s latest monetary policy update, the authority will begin to connect all banks and credit institutions to the digital rouble platform in 2024.
The reports of the use of the digital rouble for mutual trade settlements in the international trade market come within a week of reports that hinted at possible crypto use for cross-border payments.
Russia adopted a crypto law in 2020, prohibiting the use of cryptocurrencies as a form of payment. However, the law didn’t ban other crypto-focused activities such as mining and crypto trading.
With the rise of sanctions and growing uncertainty in the international trade market, Russia has turned to its national digital currency as a medium of exchange to weaken United States dominance in the international trade market.