Today the Bank of Russia confirmed that 17 additional banks are starting to onboard for the digital ruble pilot. They include Russia’s largest bank Sber, which was surprisingly amongst the second wave of banks. So far, 13 banks have been involved in the central bank digital currency (CBDC) pilots that started last August. It has involved 600 consumers and 30 other companies.
The Governor of the Bank of Russia, Elvira Nabiullina, gave a wide-ranging interview with RIA Novosti on the commencement of BRICS meetings in Russia.
She spoke about digital currencies. “When creating the digital ruble platform, we included the possibility of its integration with similar foreign platforms,” said the Governor. “We are currently conducting consultations and negotiations with many friendly countries and, of course, with the BRICS countries, on cross-border payments through digital currencies.”
Nabiullina confirmed that while cryptocurrencies can’t be used for payments within Russia, there is support for their use in foreign trade, but the legislation is still being discussed in the State Duma.
Russia is subject to widespread sanctions and the Governor noted that the risk of secondary sanctions has increased. “But what does this lead to? In my opinion, it’s time to step up efforts to create alternative payment methods. Businesses in all countries are working on this,” she said.
Since it invaded Ukraine, Russia has been locked out of the cross border payment system Swift. The Governor mentioned Russia’s Swift alternative, the Financial Message Transmission System, which is connected to 20 countries so far. She said there are discussions about interoperating with similar platforms in other countries. While she didn’t give specifics, China’s CIPS connects to 113 countries.
“It’s all connected—the transition to national currencies and a settlement infrastructure that cannot be affected by sanctions,” she added.
Stats show Russian dependence on China
An interesting aspect of the Governor’s talk was the figures she shared. Two years ago, BRICS currencies including the ruble only accounted for 26% of BRICS trade. Now the number is 85%. Regarding the share of BRICS in Russia’s trade balance, the four other BRICS countries made up around 20% in 2021, under 30% in 2022, and 40% last year.
A major beneficiary has been China and its renminbi currency. Before Russia invaded Ukraine, the Chinese currency accounted for 0.4% of exports and 4.3% of imports. Now those figures are 34.5% and 36.4% respectively.
On the likelihood of a common BRICS currency, the central bank Governor reiterated it would be complex to design and not all members support it.