The Bank of Russia is gearing up for the potential widespread adoption of the digital ruble by 2025, signaling a strategic move to modernize the nation’s payment landscape. Olga Skorobogatova, the first deputy governor of the Bank of Russia, underscored that the digital ruble is envisioned as an additional payment method alongside existing options.
These include the Faster Payments System, Mir payment cards, QR code/NFC payments, biometrics-based payments, and cash. This development raises questions about the possibility of state payments being exclusively made through the central bank digital currency (CBDC), akin to the Mir payment system introduced in 2014 to address concerns about international sanctions.
Russia on CBDC
The Bank of Russia has made it clear that the digital ruble is not intended to replace physical cash but will rather coexist with it. This commitment distinguishes Russia’s approach from China, a strong ally, which has already initiated payments to civil servants using the digital yuan to encourage the adoption of the state-controlled currency.
Moreover, the Bank of Russia is ambitiously seeking agreements with China, India, and the UAE to interconnect their payment systems. This initiative aims to enable Russians to use the digital ruble for overseas transactions. However, it is essential to note that introducing the digital ruble is not expected to significantly alter Russia’s geopolitical situation. Russian officials have also acknowledged that conducting CBDC trials requires cooperation with technologically capable and friendly nations.
In an attempt to address growing concerns, the Russian Central Bank clarified that the digital ruble is unrelated to the state’s efforts to collect biometric data. The bank initiated CBDC trials in 11 cities across Russia approximately a month ago. On the other hand, Russian lawmakers passed a law the previous year, permitting banks and state agencies to collect biometric data from their clients, including facial scans and fingerprints. This initiative led to the development of the Unified Biometric System (UBS), intended to serve as a national digital remote identification platform used by the Kremlin and banks.
Regrettably, the digital ruble and biometrics-related projects have become intertwined in the eyes of some observers, resulting in an increase in digital ruble and biometrics-related scams. Reports have indicated that fraudsters have been contacting individuals in various regions, urging them to provide biometric data to convert their cash ruble savings into CBDC tokens.
As the Bank of Russia charts the path toward the potential widespread adoption of the digital ruble by 2025, it emphasizes that this CBDC will coexist with existing payment methods and will not replace physical cash. Additionally, the Bank seeks to establish international connections to enable the use of the digital ruble for overseas transactions. Despite concerns about the intersection of the digital ruble and biometric data projects, the Central Bank has clarified that these initiatives are distinct.
