Russian Banks: CBDC Costs too High for Small Lenders

Experts caution that the substantial investment necessary to participate in the digital ruble platform may be prohibitive for small Russian banks, as it exceeds their annual technology allocations by a significant margin

According to local industry participants, the entry cost for Russian banks to join the central bank’s digital currency platform the Bank of Russia, is exceedingly high for small lenders, surpassing their annual technology budgets. This information is reported by the Russian newspaper Kommersant.

According to their projections, upgrading their systems, encompassing automated banking and compliance software, would range from ₽120 million to over ₽200 million rubles (approximately $1.3 million to $2.2 million).

According to one of the sources knowledgeable about the matter, the challenge for small institutions is that “their digital banking systems frequently originate from multiple providers, which complicates integration.”

The Bank of Russia intends to implement digital ruble services across all banks by 2027, commencing with systemically important institutions in 2025.

The regulator thinks the timeline is adequate for banks to integrate the digital ruble, citing that several large banks are already conducting pilot operations.

In early September, crypto.news reported that Sberbank, the largest banking institution in Russia, intends to integrate the digital ruble into its operations for its clients in early 2025.

The Bank of Russia introduced the digital ruble prototype in December 2021, and testing commenced in 2022.

Clients and personnel from thirteen Russian banks were involved in pilot transactions as of August 2023.

The central bank expanded the pilot in September to include up to 9,000 individuals and 1,200 companies, an increase from the previous limit of approximately 600 individuals and 22 companies.

Russia’s central bank suggested in late July that the digital ruble could be made more widely accessible by July 2025.

The central bank assured us that the digital ruble would complement the current cash and non-cash rubles rather than replace them.

To increase the adoption of the state-controlled currency, China, which serves as a critical reference for Russia’s digital currency initiatives, has initiated the payment of state salaries in Changshu using its own CBDC, the digital yuan.