Do foreign banks need a digital ruble?

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Foreign banks may be able to open accounts for digital rubles from 2025, according to the Central Bank's project. This could help conduct business with Russia bypassing the SWIFT system, experts believe

The Bank of Russia has begun preparing a regulatory framework for connecting foreign banks to the digital ruble from 2025 — around this time, the new form of currency is planned to be made available to a wide range of users. The regulator has published a draft instruction that amends the charts of accounts for banks and creates a special account that will account for digital rubles of foreign credit institutions. This part of the instruction comes into force on January 1, 2025.

The instruction creates a " belize whatsapp resource foreign bank digital ruble account". Transactions on such accounts will be carried out in accordance with the regulation "On the digital ruble platform". However, in accordance with the current version of the regulation, foreign banks cannot be participants in the platform and open digital ruble accounts, but in accordance with the law on the digital ruble, they can.

"When building the digital ruble platform, we considered the possibility of cross-border interaction. That is why it is already spelled out in the law. Such a possibility should be reflected, among other things, in the necessary by-laws. We will carry out the relevant work as necessary," a representative of the Central Bank told RBC.

Foreign banks can join the digital ruble platform to conduct international transactions bypassing the international financial messaging system SWIFT (many Russian banks are disconnected from it due to sanctions. — RBC), says Yaroslav Schitzle, head of IT and IP dispute resolution at Rustam Kurmaev & Partners: "This could be any bank that is ready to enter into an agreement with the Central Bank of the Russian Federation. Its own digital currency is not needed for this. The only question is whether it is economically feasible."

According to Ekaterina Semerikova, head of the research department at the Skolkovo School of Management's Blockchain and Fintech Lab, the key goal of attracting foreign banks to work with the digital ruble is to conduct business with Russian companies. "An account in digital rubles can make it possible to make payments that are currently difficult due to sanctions. Moreover, this may also be relevant for those who want to serve Russian clients, since there is currently a limited range of solutions for those who want to maintain international partnerships," the expert says. According to Abbasova, foreign banks can also use digital rubles to invest in Russian projects and assets and, in the future, conduct cross-payments between digital rubles and the digital currencies of central banks of other countries, similar to correspondent accounts.

Banks from the BRICS countries, especially from China and India, may be interested in working with digital rubles, since these countries continue active cooperation with Russian businesses in various areas, especially in the area of ​​strategically important exports, Semerikova lists: "In principle, this may also be interesting for banks from the CIS countries, since some of them may use this offer for clients who have connections with Russia. For example, for Russians who have left the country, or for businesses that are actively involved in cooperation with Russia."

One of the tasks of the digital ruble is cooperation with countries that will also launch a national digital currency, in particular with the states of the EAEU and the CIS, said Olga Skorobogatova, First Deputy Chairman of the Central Bank. This will also "give the opportunity to have another option for resolving the issue in connection with the disconnection of SWIFT, because in this case SWIFT will not be involved," she explained.

Since digital rubles are stored on the Central Bank platform, the counterparty risks for balances in digital rubles for foreign banks may be lower. However, a certain limitation for foreign banks opening accounts in digital rubles may be the risk that the US or EU may impose sanctions on the Bank of Russia, warns Mikhail Klementyev, head of the structuring and tax solutions group in the financial sector at Kept. Currently, Western sanctions apply to the Central Bank's international reserves abroad.