Russian Lawmaker Backs CBDC To Displace Private Banking Sector

Russia’s Central Bank Digital Currency (CBDC) the digital ruble continues to garner steam with positive pronouncements on use cases made by financial regulators in the country.

The head of the State Duma financial committee Anatoly Aksakov has said that as the digital ruble’s adoption grows, traditional banking systems will become the biggest losers. 

Speaking at a media forum reported by a local news agency, RIA Askakov noted a future decline around the present utility of private banks urging them to prioritize creativity going forward.

“As for the role of banks, I think that their role will decrease in the future with the development of blockchain. The traditional role that they served will gradually fade away.”

He added that private banks should improve their infrastructure in line with blockchain technology to key into the endless possibilities of CBDCs as these financial assets provide multi-level cross-border services. 

Askakov explained the deployment of the digital ruble so far alongside the restriction on certain deposits and spending limits.

According to him, the reason for the restriction by the Central Bank on the digital ruble at 200,000 per day is “the separation of the banking system from cash, because people from banks will have to move to the Central Bank information system.” 

He also promised that in the future it would be possible to open a deposit account and take facilities in the CBDC.

“… My personal opinion is that after some time we will make a decision that deposits can be placed in the information system of the Central Bank and loans can be issued since life requires it. Because it will be faster and, perhaps, more efficient.”

Digital Ruble takes off with high hopes

Pilots on the digital ruble commenced last month and as noted by several observers, would be key to evading Western sanctions following the country’s invasion of Ukraine.

Russia has now joined over 19 countries that have begun tests around a digital currency to replace private crypto, evade sanctions, and take back financial control. 

The country’s relationship with cryptocurrencies has never been smooth with tensions heightened when President Vladimir Putin highlighted the risk Bitcoin (BTC) and other private cryptocurrencies pose to investors and the economy leading to efforts to float a CBDC to replace digital assets.

Mikkel Morch the founder of investment fund ARK36 noted that it will enhance the country’s stance against sanctions adding that the creation is “part of a geopolitical war between pro-dollar countries and anti-dollar countries.” 

Olga Skorobogatova, the Bank of Russia’s Deputy Governor explained that the rollout of the CBDC would benefit the consumers in the long run as traditional institutions begin to offer loyalty programs. 

“In this competition, in any case, the consumer will win, who will be able to use the entire set of non-cash payment tools,” he added.

In a related development, a beauty salon in Yekaterinburg has become the first business to accept a digital ruble payment in the country, setting the pace for future adoption.