The Bank of Russia has announced it will create a joint payment system with the United Arab Emirates (UAE) using the digital ruble. Bank of Russia’s First Deputy Governor Olga Skorobogatova stated that the system would serve individuals and businesses alike and estimated its development would take a year.
Russia to Develop Digital Ruble ‘Fast Payments’ System With the UAE
Russia is taking the first steps to internationalize its central bank digital currency (CBDC), the digital ruble. The Bank of Russia recently announced that it will collaborate with the United Arab Emirates (UAE) to develop a digital ruble-based fast payment system. The announcement was made by First Deputy Governor Olga Skorobogatova at Finopolis, a forum organized by the bank with IT industry leaders to discuss the use of digital technology in finance.
Skorobogatova stated:
We will work out the fast payment system and the CBDC because the colleagues are ready with the digital ruble and we are ready.
In addition, Skorobogatoba estimated that the development of the payments platform, dedicated to serving individuals and businesses, could be completed in a year after solving the problem of identifying the users on the system.
The announcement shows confidence in the capabilities of the digital ruble, even as it is still being tested in a limited pilot that began in August with the participation of 13 private banks. At Finopolis, Elvira Nabiullina, head of the Bank of Russia, explained that the pilot was still going according to plan and reiterated that it would expand in the next year to include new participants and use cases.
“The central bank is technologically ready for international operations with the digital ruble, but much depends on partners,” Nabiullina concluded.
‘Playing Roulette’
The announcement of the development of this joint payment system comes as the Western world is pressuring the UAE to halt exports to Russia amid the Russia-Ukraine war. However, the UAE has refused to give in to these pressures, adhering only to sanctions enacted by the United Nations (UN).
Nonetheless, unilateral sanctions are already affecting the transacting capabilities of individuals and companies trading with Russia using traditional finance channels managed by Western entities. In March, James O’Brien, head of the U.S. office of sanctions coordination, stated that these entities were “playing roulette.”
The Russian government has considered using the digital ruble for international payments since last year, when Anatoly Aksakov, head of the Financial Market Committee at the State Duma, stated that using CBDCs for settlements would affect U.S. control over the global financial system. More recently, the Bank of Russia even detailed the processes of a multinational CBDC-based settlement system.
The UAE is Russia’s largest trading partner in the Gulf, with a trading relationship that reached $9 billion during 2022.
What do you think about the Bank of Russia’s announcement? Tell us in the comments section below.
via Sergio Goschenko
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