Bank of Russia outlines two models for cross-border settlements using the digital ruble

In the first quarter of 2023, the Bank of Russia will begin developing a model for cross-border settlements using the digital ruble. This was reported by Kommersant, citing a presentation on the project CBDC.

The document presents two models for cross-border settlements:

1. Countries sign separate bilateral agreements to integrate the digital-currency platforms with each other. Each state’s platforms provide conversion and transfer of formats between them according to agreed rules and standards.
2. A country connects to a single integration platform that enables cross-border payments based on developed unified protocols.

As Viktor Dostov, head of the Association of Participants in the Market for Electronic Money and Money Transfers, explained, the first approach resembles correspondent relationships “each with every other,” and the second resembles the creation of a hub linking platforms in the manner of a payment system.

Roman Prokhorov, chairman of the board of the association ‘Financial Innovations’, described the first scheme as simpler but less promising, while the second as a more ‘advanced’ option that effectively implies the creation of a supra-national payments system.

Earlier, the prototype platform for the digital ruble took place in January 2022 with the participation of five banks. Together with the regulator, they tested the issuance of the asset, the opening of digital wallets, as well as transfers between citizens.

Testing of the instrument in real operations and with real clients will start in April 2023. The sanctions against Russia’s banking system have accelerated the Bank of Russia’s pilot.

The full-scale launch of the digital ruble as a third form of money is expected by 2030.

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