How Russia’s CBDC might allow it to evade sanctions, trade with China

Anatoly Aksakov China Britain Germany Russia Poland Ukraine state Indiana state Baltic Reuters UPS Digital blockchain

28.09.2022 - 00:38

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On 26 September, the United Kingdom announced a new package of sanctions against Russia. This round contains 92 sanctions, in response to referendums held by Russia in Ukraine following its controversial invasion. A number of these sanctions are meant to hurt executives from state-backed financial institutions.

Russian banks have been facing a lot of heat in the face of the invasion. Just last week, Germany joined Poland and Baltic states in their demand to expel more Russian banks from the SWIFT network in order to hurt Russia’s financial infrastructure.

Russia’s central bank has tried to tackle this problem by ramping up the development of its digital ruble and easing restrictions on the use of crypto for cross-border transactions.

A report by Reuters revealed the latest developments around Russian CBDCs. Anatoly Aksakov, Head of the Financial Committee in Russia’s lower house of parliament, has emphasized on the importance of a digital rouble, adding that it will play a significant role in evading sanctions that have been imposed by the west.

“The topic of digital financial assets, the digital rouble and cryptocurrencies is currently intensifying in society, as Western countries are imposing sanctions and creating problems for bank transfers, including in international settlements.”

As of now, the digital rouble is undergoing trials conducted by the Bank of Russia, in collaboration with other financial institutions. When the central bank had announced trials earlier this year, a dozen Russian banks showed interest in being a part of the pilot program.

The Russian lawmaker also revealed that the digital rouble could be launched by early 2023 and the country plans to use it to facilitate mutual settlements with China.