The Bank of Russia has confirmed plans to release a central bank digital currency (CBDC), which it said could be fully launched by 2023.

A central bank digital currency (CBDC) is a digital currency issued and backed by a central bank, fundamentally different from cryptocurrencies like Bitcoin and Ethereum.

The news comes as 80 per of central banks are currently exploring CBDCs according to research by the Bank for International Settlements.

The Russian CBDC is set to work via a two-tiered system, in which the Bank of Russia distributes the CBDC to third parties like banks which then distribute it to consumers and businesses.

Bank of Russia said it is likely to use open-source code to build its own proprietary digital ledger for the currency.

Almost two-thirds - 73 per cent - of transactions in Russia have already gone digital, according to Olga Skorobogatova, a Bank of Russia board member.

The digital currency will reduce costs for households and businesses, increase the speed of payments, and enable the development of innovative products and services according to the bank.

UK think tank The City United Project recently claimed a CBDC is crucial to strengthening London’s position as a financial centre following the UK’s exit from the EU.

However, ongoing proposals for a digital euro have experienced significant opposition in European nations such as Germany, where news magazine Focus wrote that a digital euro would be “catastrophic” for savers.

“A digital ruble functions as a third form of money,” said Skorobogatova. “Why a third form?”
She added: “We have cash, we have non-cash, and a digital ruble will look like a token of the ruble, which incorporates the properties of cash and non-cash.”

Share Story: