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State-backed financial institutions VTB Bank and Promsvyazbank (PSB) have conducted the first successful transactions with a digital ruble issued on the test version of the Bank of Russia’s central bank digital currency (CBDC) platform.
The creation of a prototype of the digital ruble platform was finished in December 2021, and since, 12 banks have confirmed their readiness to take part in testing the platform, according to the central bank.
Now, VTB Bank, the country’s second-largest bank, has become the first to complete a cycle of transfers alongside PSB.
In addition, a third institution has connected to the digital ruble platform, the central bank confirmed.
"The first successful operation with the digital ruble is a landmark moment in the development of the digital payment infrastructure of our country,” said Vadim Kulik, VTB Bank’s chairperson.
The digital ruble will create innovative services based on smart contracts and increase the availability of financial services, including in remote and sparsely populated areas of Russia, as it can be used without access to the internet, he continued. “This will become a driver for the development of new national payment services for the population and business across Russia."
To perform the transfer, VTB developed a prototype mobile app. This enables users to register, open a digital wallet, exchange non-cash rubles from their bank account for digital rubles and send digital rubles to other users on the platform.
How will the digital ruble function?
The Bank of Russia and market participants will interact with the digital ruble based on a two-tier retail model approach.
The Bank of Russia is the issuer of a digital ruble and the operator of the new platform.
Within this framework, users open wallets and conduct operations across the digital ruble platform through their financial institution, including through their bank’s mobile applications.
"The digital ruble platform provides new opportunities for citizens, businesses and the state. We plan that transfers in digital rubles will be free of charge and available in all Russian regions for households, and businesses,” said Olga Skorobogatova, first deputy governor at the central bank, adding that these will reduce costs and enable more innovation.
“As for the state," she continued, "these transfers will serve as a new tool for earmarked payments and for budget payment administration."
Further tests needed
The central bank plans to further explore a digital ruble in a testing phase, with various scenarios being examined. “At further stages of the platform development, we are also going to ensure a seamless interaction with digital platforms and digital ecosystems,” she confirmed.
The first stage of the project includes testing of issued digital rubles, the opening of digital wallets by banks and households, as well as transfers between individuals.
In the second stage, it is planned to test payments for goods and services at retail and service companies, payments for public services, sales of smart contracts, as well as interaction with the Federal Treasury.
A roadmap for the implementation of the digital ruble platform will be compiled as a result of this testing phase.
Beyond VTB and PSB, other financial institutions involved include: Russia’s largest bank, the state-backed Sberbank; the country’s agricultural bank, Rosselkhozbankas; as well as private Gazprombank; and Alfa Bank.
