The Bank of Russia has unveiled its support for using cryptocurrency payments in international settlements. Governor Elvira Nabiullina emphasized the need for a sandbox-style experimental regime for such transactions. In contrast, Russia plans to launch payments using national digital assets without the same precautions.
Sandbox for Cryptocurrency Payments
The Bank of Russia recognizes the potential of expanding payment options for international settlements. Governor Nabiullina announced the bank’s support for a bill that would facilitate the use of cryptocurrency in such transactions. However, she stressed the importance of implementing these payments within an experimental sandbox environment.
This sandbox-style regime would allow for the controlled exploration of cryptocurrency payments without compromising the stability of the financial system. It provides a safe space to test and evaluate the effectiveness and risks associated with using cryptocurrencies.
National Digital Assets Exempt
In contrast to the approach taken with cryptocurrency, the Bank of Russia is more open to using national digital assets, also known as CBDCs, for international settlements. First Deputy Chairman Olga Skorobogatova revealed that the bank has already received interest from businesses eager to experiment with this option.
The legal framework for CBDC use in international settlements was established by a law enacted on March 11. This law empowers the Bank of Russia to oversee and regulate such transactions.
Wider Context
The Bank of Russia’s stance aligns with a global trend toward exploring the potential of cryptocurrency in international payments. Russia’s participation in BRICS, an international bloc that includes China and India, has further fueled the discussion of developing a blockchain-based payment system within the group.
The move comes amidst a broader shift toward financial digitalization. In March 2023, Russian Finance Minister Anton Siluanov indicated that the bank would collaborate with officials to determine the scope of cryptocurrency use in the country.
Conclusion
The Bank of Russia’s decision to support the use of cryptocurrency for international settlements marks a significant step in the evolution of digital payments. The establishment of a sandbox environment for cryptocurrency payments should give the institution confidence in exploring this new avenue. Meanwhile, Russia’s embrace of national digital assets highlights its commitment to innovation in financial technology. It remains to be seen how the experimental regime for cryptocurrency payments will unfold and contribute to the global landscape of cross-border payments.