The Central Bank of the Russian Federation has announced in a statement released on February 1, 2024, that 17 more banks will be joining its digital ruble pilot program, moving the number of currently supported banks for the program to 30, potentially bringing the digital ruble to more people.
Recall that Russia launched the pilot program on August 23, 2023, with 13 banks, after several internal tests at the Russian central bank indicated readiness for widespread usage. With the successes recorded (so far) in the pilot program, Russia’s highest bank is confident of the ability of its newest currency to handle more users, hence the recently announced partnership.
Russia started its journey towards issuing a CBDC on December 21, 2021, when it unveiled its initial prototype of the digital ruble. The project has matured since then, with the latest announcement suggesting that the Russian CBDC would be available with 30 Russian banks later this year.
Which Banks Are Joining the Pilot?
The recent announcement lists the new banks joining the digital ruble pilot and the existing sites already on the program. According to the statement, some of the banks “planning to join the pilot”, include JSC AB RUSSIA, JSC “BANK ORENBURG,” JSC Russian Standard Bank, and JSC “SME Bank.”
Additionally, JSC Rosselkhozbank, JSC Tinkoff Bank, JSC Expobank, JSC JSCB “NOVIKOMBANK,” Bank “RBB” (JSC), and CB “Kuban Credit” LLC. Bank Tochka LLC, LLC “Primtercombank,” PJSC RosDorBank, PJSC Sberbank of Russia, PJSC CB Center-Invest, RKNB Bank, and RNKO “Dengi.Mail.Ru” are also among the banks newly joining the digital ruble pilot.
These new banks will join JSC ALFA-BANK, VTB Bank, PJSC MTS-Bank, and PJSC Bank Sinara, among others, to bring digital rubles to the Russian public in the pilot program. While all the (aforementioned) banks have agreed with the Russian central bank to join the pilot program, they’re still reportedly setting up their systems and cannot offer the CBDC to users, at least for now.
Digital Ruble Pilot Sees Massive Boost
The caliber of banks joining the second phase of the digital ruble pilot program indicates that the country might be going in a slightly different direction with its digital currency this year, possibly delving into institutional, international, and industrial banking using the CBDC.
Observers theorize the country may attempt to introduce its digital ruble for international trade deals like its regular fiat ruble, as the new list contains banks on disputed territory. Analysts also believe the Russian Central Bank will likely start pushing for the digital ruble’s availability for industrial banking in 2024, with agricultural and commodity banks making the new list.
While the first phase of the CBDC trials targeted and was (largely) restricted to the larger cities, the abundance of regional banks on the new list indicates the Kremlin’s plans to expand usage to remoter areas in Russia.
Russia Makes Case for the Digital Ruble
The Kremlin started its push for a digital-only version of the ruble in 2021, with the Russian government launching its first pilot program for the digital currency through its central bank in 2023. The idea of a programmable and centralized digital currency is an exciting prospect for an authoritarian regime. The Russian president will likely push for its implementation in the coming months.
The Russian central bank’s statement announcing the 17 new banks joining the pilot program noted a few benefits of a digital ruble to appeal to users. The bank pointed to offline use, uniformity of rates, and potential simplification of cross-border payments as top reasons to support CBDCs in Russia.
The press release also differentiated between a cryptocurrency and a digital currency, stressing that while crypto is decentralized with “no single center that would bear obligations on it (sic),” the Bank of Russia will issue digital rubles, making it centralized and backed by the Russian government. While cryptocurrency transactions are legal in Russia, using them as a payment method for goods and services is not. We also don’t expect the Russian government to relax this legislation when it eventually makes the digital ruble widely available.