CBDC

Digital Ruble to Help Curb Use of ‘Money Surrogates,’ Russia Says in Financial Strategy Document

15/09/2021 by Idelto Editor

The launch of a digital ruble will be among Russia’s key priorities of digitalization this decade, the country’s financial market development strategy has confirmed. The document claims the issuance of a digital national fiat will help the central bank to prevent Russians from using “money surrogates” as officials have previously called cryptocurrencies.

Bank of Russia to Issue Digital Ruble by 2030, According to Financial Market Development Plan

The Strategy for the Development of the Financial Market of the Russian Federation by 2030 was released this week by the Ministry of Finance. The plan is open for public discussions between Sept. 14 and Oct. 13, 2021, according to a notice published by the State Automated Information System.

The strategy defines the launch of a digital version of the Russian ruble as one of the priority tasks in the field of digitalization, as Bits.media crypto news outlet reported. The digital ruble, the authors have pointed out, will become the third form of money issued by the Central Bank of Russia (CBR).

The central bank digital currency (CBDC) is expected to facilitate the development of Russia’s payment infrastructure and the introduction of innovative financial instruments. The digital ruble should also increase the availability of banking services for private and corporate users while reducing transaction costs.

Moscow hopes the digital ruble will allow it “to continue to discourage the use of monetary surrogates” which are banned under current law. Russian regulators have previously described cryptocurrencies using that term. The Finance Ministry insists money surrogates bring money laundering and terrorist financing threats, pose risks to Russian citizens while hindering macroeconomic policies.

Furthermore, Russia plans to proceed with the development of its Mir payment system, the country’s Faster Payments System and Financial Messaging System. Bank of Russia will implement Suptech and Regtech solutions to analyze transactions and monitor regulatory compliance in order to more effectively manage risks and ensure information security. The document notes:

In the context of the launch of the digital ruble and the development of payment instruments, the Government of the Russian Federation and the Bank of Russia will continue to oppose the use of monetary surrogates.

To ensure consumer protection, Russia will take into account international standards set by the Committee on Payments and Market Infrastructure, the International Organization of Securities Commissions and the Financial Stability Board, the strategy emphasizes. The digital ruble should enable authorities to better deal with crises and inflation as they maintain the stability of the Russian economy.

The publishing of the financial market strategy comes after the Bank of International Settlements (BIS) recently urged central banks to quickly develop their CBDCs to compete with payment initiatives in the private sector. At a financial forum in Slovenia, Benoît Cœuré, who heads the BIS Innovation Hub, warned monetary authorities should accelerate their work on state-issued digital currencies as “stablecoins and cryptoassets are already here.”

Speaking to reporters last week, President Vladimir Putin’s press secretary Dmitry Peskov stated that the Russian Federation is not ready to recognize bitcoin, insisting that such a move would not bring any benefits to the country. In May, Bank of Russia’s Deputy Governor Olga Skorobogatova announced that the CBR is preparing to present a digital ruble prototype by the end of 2021.

Do you think the digital ruble will limit the use of cryptocurrencies in Russia? Share your thoughts on the subject in the comments section below.

BIS Asks Central Banks to Urgently Develop CBDCs to Compete With Crypto Assets

12/09/2021 by Idelto Editor

BIS Asks Central Banks to Urgently Develop CBDCs to Avoid Falling Behind Cryptocurrencies

The head of the Bank of International Settlements (BIS) Innovation Hub, Benoît Cœuré, has urged central banks to act now on central bank digital currencies (CBDCs) to compete with initiatives in the private sector, including cryptocurrencies. “CBDCs will take years to be rolled out, while … crypto assets are already here,” he said.

BIS Says Central Banks Need to Hurry up With CBDCs

Benoît Cœuré, head of the BIS Innovation Hub, talked about central bank digital currencies (CBDCs) at the Eurofi Financial Forum, Ljubljana, Friday. He called on central banks to urgently develop CBDCs to compete with payment initiatives in the private sector, including cryptocurrencies.

“Today, the financial system is shifting under our feet,” he explained. “Big techs are expanding their footprint in retail payments. Stablecoins are knocking on the door, seeking regulatory approval. Decentralized finance (defi) platforms are challenging traditional financial intermediation. They all come with different regulatory questions, which need fast and consistent answers.”

Asserting that “CBDC will be part of the answer,” he explained: “A well-designed CBDC will be a safe and neutral means of payment and settlement asset, serving as a common interoperable platform around which the new payment ecosystem can organize.”

The BIS official added: “It will enable an open finance architecture that is integrated while welcoming competition and innovation. And it will preserve democratic control of the currency.” He opined:

The time has passed for central banks to get going. We should roll up our sleeves and accelerate our work on the nitty-gritty of CBDC design. CBDCs will take years to be rolled out, while stablecoins and cryptoassets are already here. This makes it even more urgent to start.

Cœuré explained that the BIS Innovation Hub is helping central banks develop CBDCs. “We already have six CBDC-related proofs of concept and prototypes being developed in our centres, and more to come,” he revealed.

Cœuré added: “A CBDC’s goal is ultimately to preserve the best elements of our current systems while still allowing a safe space for tomorrow’s innovation. To do so, central banks have to act while the current system is still in place – and to act now.”

According to the Atlantic Council’s CBDC tracker, 81 central banks are currently exploring their own digital currencies. Among them, five have launched, 14 are being piloted, 16 are under development, and 32 are being researched.

Among the central banks currently studying CBDCs is the European Central Bank (ECB), which recently announced the official launch of a two-year investigation of a digital euro. “Once the investigation phase has ended, we will decide whether or not to start developing a digital euro,” the bank said.

What do you think about the BIS asking central banks to speed up CBDC development? Let us know in the comments section below.

Crypto Mining Should Be Registered and Taxed in Russia, Financial Market Committee Chair Says

12/09/2021 by Idelto Editor

Cryptocurrency mining should be registered as entrepreneurial activity and taxed as such, according to Anatoly Aksakov, chairman of Russia’s parliamentary Financial Market Committee. The lawmaker also thinks Russian digital currency regulations need refinement.

Amendments Likely to Affect Mining, Taxation, Definition of Digital Currency

Discussing upcoming changes in the legislation regarding digital currencies in Russia, head of the Financial Market Committee in the State Duma, Anatoly Aksakov, expressed his opinion that cryptocurrency mining should be added to Russia’s register of entrepreneurial activities and taxed accordingly.

The treatment of crypto mining and the taxation of cryptocurrency-related operations are among the areas that are likely to be affected by the legal amendments to be adopted during the fall session of the Russian parliament. Speaking to Tass news agency on the sidelines of the Moscow Financial Forum this week, Aksakov elaborated:

Since this is a type of entrepreneurial activity, obviously, it is necessary to enter it into the register, assign a corresponding code and introduce taxation.

The parliamentarian was positive that amendments concerning digital currencies are to be expected as the Duma has already adopted on first reading a law dealing with the taxation of “in fact, cryptocurrencies.” Earlier this month, Chairman of the Committee on Legislation Pavel Krasheninnikov told Interfax that he hopes the law will hit the floor of the lower house again in the coming months.

Anatoly Aksakov further noted that the use of the legal term pertaining to cryptocurrencies, as it’s now defined, causes confusion. The concept of “digital currency” can refer to a central bank digital currency (CBDC) issued by the Bank of Russia but it can be understood as cryptocurrency as well, the lawmaker explained. Aksakov thinks the two should be clearly distinguished.

The Financial Market Committee chairman insisted more discussions are needed to determine what “digital currency” actually means. Although cryptocurrency is referred to as digital currency in Russian law, Aksakov pointed out that it is used as a financial instrument and financial asset for investment purposes rather than as a means of payment.

The high-ranking member of the Russian parliament added that Bank of Russia’s powers to issue a digital ruble and maintain its circulation should also be defined. The monetary authority announced a plan to digitalize the national fiat currency last October. The central bank is preparing to issue a prototype of the CBDC by the end of this year.

What are your expectations about the upcoming legal changes regarding cryptocurrencies and related activities in Russia? Let us know in the comments section below.

Central Bank of Nigeria Selects Barbados-Based Fintech Firm as Technical Partner for CBDC Project

31/08/2021 by Idelto Editor

The Central Bank of Nigeria (CBN) has named the fintech firm Bitt Inc. as a technical partner for its digital currency project, the e-naira. As a technical partner, Bitt is expected to use its “technological competence and implementation experience” to help the CBN successfully launch the central bank digital currency (CBDC).

E-Naira Draft Guidelines

The CBN’s unveiling of the Barbados-based firm as its partner comes shortly after reports suggested that the central bank had released draft guidelines for the e-naira. In justifying the selection of Bitt, Osita Nwanisobi, the CBN’s director of communications, touted the fintech’s “tested and proven digital currency experience.”

These claims by Nwanisobi appear to be supported by a statement on Bitt’s website that suggests the fintech firm had signed a contract to conduct a CBDC pilot for the Eastern Caribbean Central Bank (ECCB). The contract was signed in 2019 and in April of 2021, ECCB finally launched its digital currency.

E-Naira and the Financial Inclusion Cause

As previously reported by Bitcoin.com News, the CBN has set October 1, 2021, as the launch date for its CBDC. The central bank insists this digital currency will deepen financial inclusion, and enable cheaper, faster remittance inflows. The apex bank says it expects the e-naira to enhance cross-border trade as well as the effectiveness of its monetary policies.

The launch of the e-naira by the CBN — if successful — will mark the final culmination of a plan that was set in motion nearly four years ago. The launch will also be seen as an important victory for both the CBN and its anti-bitcoin governor, Godwin Emefiele.

Still, with just a few weeks left before the launch, CBN must cross its fingers that it has done adequate preparation to ensure the e-naira is a success.

What are your thoughts on the CBN’s choice of a technical partner? Tell us what you think in the comments section below.

India Plans to Unveil Central Bank Digital Currency Model by Year End

09/08/2021 by Idelto Editor

The deputy governor of India’s central bank, the Reserve Bank of India (RBI), says the bank should be able to come up with a central bank digital currency (CBDC) model by the end of this year.

India May Unveil a CBDC Model by Year End

The Reserve Bank of India (RBI) may unveil a model of a central bank digital currency (CBDC) by the end of the year, Deputy Governor T. Rabi Sankar said Friday at the post-Monetary Policy Committee (MPC) press conference.

Without providing further details, he described:

These are extremely evolving technologies and business choices that one has to make, and therefore it’s difficult to put a date, but we should be able to come up with a model in the near future, probably by the end of this year.

The deputy governor continued: “We are evaluating the issue of scope, technology, distribution and validation mechanism etc.”

Last month, he revealed that the central bank was working on a “phased implementation strategy” for India’s CBDC and also “examining use cases which could be implemented with little or no disruption to India’s banking or monetary systems.”

According to a recent report, 81 countries, representing over 90% of global GDP, are exploring launching their own central bank digital currencies.

Meanwhile, the International Monetary Fund (IMF), the World Bank, and the Bank of International Settlements (BIS) say CBDCs “have the potential to enhance the efficiency of cross-border payments, as long as countries work together.”

What do you think about India launching a central bank digital currency? Let us know in the comments section below.