The Central Bank of Russia is taking the necessary steps to make the swift shift to digital finance a reality with the latest addition of virtual assets as part of the reformed banking chart of accounts.
Russian Banks to Include Digital Assets in Accounting Books
With the new drafts of the banking chart of accounts, financial institutions can now provide data on digital assets. According to the Central Bank of the Russian Federation (CBR), the updated draft of the banking chart accounts is for next year.
Therefore, beginning in 2023, financial services providers must accommodate transactions, including the digital version of the Ruble. Moreover, the financial regulator has been expanding the testing phase of its central bank digital currency (CBDC).
It is expected that the CBDC will help facilitate retail settlements by next year. There are currently broad regulatory moves by the monetary system to oversee the digital asset industry.
Furthermore, Russia’s existing digital financial asset (DFA) rule refers to digital coins and tokens with an issuer to oversee their supply. However, a new bill on digital currencies aims to cover assets like Bitcoin comprehensively.
Russia’s decision to invade Ukraine has irked other world powers, who slapped trade sanctions on the country. As the international-imposed sanction on Russia continues to bite, the country hopes to use the digital Ruble and cryptocurrency to settle cross-border transactions with partners.
In the meantime, there will be a single account for the digital Ruble, while banks can utilize several accounts depending on their DFAs.
The monetary authority emphasizes the reason for just one digital Ruble account. According to the regulators, commercial banks are to process only CBDC transactions. The Bank of Russia will be the issuer of the digital Ruble which will be stored in wallets under its custody.
Meanwhile, credit providers will serve as the bridge by facilitating transfers for individuals and organizations.
Russia Doubles Up on CBDC Implementation
Russia’s monetary authority is currently pursuing its CBDC projects with more than a dozen commercial banks participating in the trials. In addition, it has been actively pushing for implementing the CBDC for international trade with its counterparts from other countries.
Furthermore, the Ministry of Finance intends to adopt cryptocurrency as a tool to dodge the Western financial restrictions Russia has been subjected to since the start of the war.
In August, the Bank of Russia announced that its CBDC would implement a targeting technology. This implies that some digital Rubles could be designed to pay for specific goods.
Also known as “coloring,” the targeting technology is meant to enhance the efficiency of retail spending in the country. In addition, government contracts and public procurement are other areas that could benefit from the targeted CBDC.
The monetary authority is adamant that the digital Ruble would enhance the availability of financial services in unbanked areas.
Despite the previous ban on cryptocurrency, the country’s financial regulator is taking the initiative to drive digital currency adoption.