Blockchain, the term that reminds about its first use case and which is almost everyone’s favourite and in Bandwagon “Bitcoin,” isn’t getting much appreciation from the Russian authorities.
Despite having industry disruption capabilities, the Central Bank of the Russian Fed (CBR) first deputy governor believes that “blockchain technology” isn’t a cure to every problem and “not a universal solution,” which many had promised five years ago.
On April 2, in an interview with an international media outlet Euromoey, Olga Skorobogatova, has discussed her in-depth explorations on the topics of sandboxes, and blockchain-related deployment challenges in the regulated banking ecosystems.
According to the digital supremo, there are various limitations in blockchain technology which sets a limit for more profound innovation.
Skorobogatova said, “Blockchain is a great fit for things like letters of credit and guarantees because it is essentially a technology of trust.” However, it is not a panacea to the very problem.
Then she said, “I remember being told by some tech companies back then: ‘Olga, in five years, everything will be powered by blockchain, there will be no other technologies.’’
Since July 2014, Skorobogatova is a vital personage to the setting up of CBR’s national payments system. She is one of the best active officials in the world when it comes to digital innovation.
Reportedly, in the span of last six years, under her sift probe and direction, Russia has seen a series of significant initiatives, in infrastructure projects such as national fast payments and biometrics systems, regulatory sandbox, a financial technology association, and a blockchain-based platform.
Blockchain isn’t Fruitful Everywhere
In Jan 2017, CBR formed a National Fintech Association with the collaboration of large market lenders such as Sberbank, VTB, and, Alpha Bank. This fintech association is working like Qiwi— The publicly traded Russian payment service provider that operates in electronic online payments.
The association has worked on a project named “Masterchain”— First Russian national blockchain network which has designed to transfer the digital values (data) and information between participants.
For the past three years, the project is live in the Russian financial market and working well in electronics mortgage accounting. The information relays, there are further plans to expand this project to cover trade finance as well.
According to Skorobogatova, there are certain limitations in blockchain tech, which she is well aware. She said, “Time has proven me right,” while reminiscing her conversation with the tech companies a few years back.
Russian Authorities Don’t Appreciate Cryptocurrencies
Reportedly, Skorobogatova and CBR officials have found cryptocurrencies a “sceptical” affair and don’t believe in them as a safe means of payment.
“We do not believe in them as a means of payment. They produce major risks for customers due to their high volatility, lack of guarantees for savings, widespread use for money laundering,” and other aspects like financing of terrorism. Skorobogatova mentioned.
Three years back in 2017, during the booming period of ICO set-ups, Russian policymakers have taken away the draft bill outlawing cryptocurrencies that had been in the works since 2014.
However, it’s been three years, and the authorities have not yet adequately contemplated and legislated on the blockchain, smart contracts, and crypto-assets like many other nations.
Though, Skorobogatova indicated the likeliness towards stable coins. And, believes that stable coins are “more reliable” since they are “real asset-backed cryptos ” and can deliver “certain guarantees for individuals and legal entities.”
According to her statement, once the crypto legislature would come, it would also include the potential aspects of stable coins, including Facebook’s Libra and Telegram’s Gram token. She has even verbalized that a clear regulatory structure of crypto assets is essential on a global level for consumer protection and safety concerns.
“We are actively interacting with other regulators globally on the issues of stable coins. At the moment, there are more questions than answers in initiatives such as Libra.” The CBR digital supremo noted.
Russia Mulling Over CBDC
Reportedly, Russia is no behind when it comes to providing open banking facility to its populace while deploying mushrooming fintech.
There are probabilities Russia can introduce it’s Central Bank Digital Currency. However, there is no specific information has yet revealed by the deputy governor expect the rumination.
While giving her careful thoughts, Scorobogatova said, “For me, the big question is if there is any added value in using central bank digital currencies (CBDCs) – for the economy, for individuals, and businesses. People want fast digital payments, but this can be implemented with a national fast payments platform.”
“What can CBDCs bring to the table? So far, no one in Russia or elsewhere has been able to give a convincing answer or even to explain the difference between electronic payments and CBDCs.”
As per the report, the CBR’s digital strategy plan for 2021-2023 would come out later this year. Hopefully, it would clear the upcoming plans likeableness of Russia on CBDC.