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Sanctioned Russian bank tests in-app operations using digital rubles

04 Sep 2022 By: Rohit Khandelwal
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A Russian bank, one of the largest by assets in the nation, has completed a successful trial of digital ruble transactions processed through its mobile application. 

The state-owned Promsvyazbank was one of the organizations sanctioned by the West early this year in connection with Moscow's actions in Ukraine.

Promsvyazbank (PSB) is one of the first Russian banks to participate in the Bank of Russia's experiments with central bank digital currency (CBDC). According to a local media outlet, the bank has recently conducted digital ruble transactions using its mobile application.

To carry out the actions, participants had to register in the application and create a digital wallet. They were then allowed to use their account to swap ordinary electronic bank money for digital rubles and send digital currency to other bank clients as well as those of other banks participating in the testing initiative.

According to the report, all information about the executed transactions was given by the Central Bank of Russia's (CBR) digital ruble platform and was instantly reflected on the balances of the users' digital wallets in the smartphone application. The monetary authority unveiled the platform's prototype late last year.

PSB is one of the first banks to successfully develop and implement a simple and comprehensible technology for completing digital ruble transactions through a mobile application. We see tremendous potential in this instrument, which we anticipate will become a new settlement standard in the Russian economy, said Senior Vice President Alexander Chernoshchekin, who oversees the bank's digital business section.

The successful testing, according to the senior executive, lays the groundwork for future operations with the digital ruble and opens up new potential for the Russian people and businesses. The populace will have access to reliable and secure digital currency transactions, while the government will have extra capabilities to oversee budget payments and targeted social benefits, he explained.

The new settlement technology will assist organizations in automating all payments and internal business operations, according to Chernoshchekin. The Bank of Russia is in charge of storage and accounting in the digital ruble ecosystem, and CBR officials assert that all payments are encrypted and subject to additional fraud-prevention procedures.

As part of the trials that began in early 2022, a dozen credit institutions have opted to participate in the testing of the digital ruble once their systems are ready to link to the CBDC platform. Russia has advanced the project's timeline, aiming for a complete launch of its digital currency in 2024.

Promsvyazbank is one of Russia's top ten banks in terms of assets and deposits. Previously a private bank owned by Russian oligarchs Dmitry and Alexei Ananyev, it was nationalized by the Russian government in 2018 and is now recognized as a bank assisting Russia's military sector. Sanctions have been levied against it in response to Russia's military engagement in Ukraine.

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