Gazprombank Cautiously Warns of Economic Consequences of a Speedy CBDC Rollout in Russia

Gazprombank, a subsidiary of Russia's largest gas company, Gazprom, suggested allowing banks extended time to implement the digital ruble. The Central Bank's digital currency project has been fast-tracked as a result of economic sanctions during recent political tensions.

Gazprombank, one of the 15 banks taking part in the CBDC pilot, released a statement to the public on Feb. 7 with advice that banks be wary of potential risks when transitioning to a digital ruble and take every step necessary to prevent losses. The statement proposed that traditional banks approach the implementation of a digital ruble with caution, taking the necessary time for the financial system to adapt.

Despite this, the statement acknowledges that introducing a CBDC can increase transparency in the Russian financial sector and economic activities.

McKinsey's Russian branch estimated that traditional banks could face a loss of approximately $3.5 billion (250 billion rubles) once Central Bank Digital Currency (CBDC) becomes implemented over the course of the next five years. In contrast, the same consultancy firm projected that retailers would reap a yearly gain of around $1.1 billion in this same timeframe.

Work on Russia's own Central Bank Digital Currency (CBDC), the digital rouble, commenced in 2020 and is currently being tested to settle transactions with banks. It is anticipated to be finished by the end of this year. In the most recent monetary policy update from the Bank of Russia, it was announced that all banks and credit organizations will be connected to the digital rouble platform by 2024.

The Central Bank of Russia has created a framework for cross-border payments employing a Central Bank Digital Currency (CBDC). This decision was made as a response to the intensifying financial and trade sanctions imposed after the Russian Federation's full-scale invasion of Ukraine in late February 2022.