Russian Central Bank to Classify CBDC as High Quality Liquid Assets

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The Russian Central Bank has declared its intention to classify its digital ruble, the nation’s CBDC, as a “high-quality liquid asset” (HQLA). It is expected that, when this is accepted, commercial banks in the country will be obliged to follow suit.

Typically, central banks and regulators classify assets such as fiat cash, central bank reserves, and government bonds issued by nations with high credit ratings as “high-quality liquid assets (HQLAs).” To this point, however, they have only classified conventional fiats, not CBDCs, as HQLAs.

The Central Bank has provided financial players until September 23 to submit comments on its revised guidelines. If accepted unchanged, the new methodologies will become compulsory for commercial banks beginning October 1, 2024, and banks will be required to include digital rubles in their HQLA calculations.

The pilot test of the digital RUB got underway earlier this month, with 600 citizens in 11 cities making “real-world” transactions with the coin, and over a dozen domestic banks taking part. It appears, however, that commercial banks are divided in their opinion of the digital ruble. This recent move could increase their doubts.

In a 2022 article, economist Ruth Wandhöfer wrote: “CBDC transformations create chances for [a] cross-border payments overhaul.” She explained that the use of central bank reserves-backed liquidity between banks in different currencies could avoid the need for banks to extend commercial credit to one another. This would mean that transactions could be “considered HQLAs.”

It is almost certain that the Russian Central Bank wants to use its token in cross-border scenarios as soon as possible. Traditional Moscow allies such as Belarus and Kazakhstan have begun work on their own digital fiats, with Minsk explicitly stating that its own coin will also be used in cross-border deals.

China and Brazil, both fellow BRICS nations, are also making progress in their respective digital currency projects. Beijing has begun to make remarks about the potential of its own coin in cross-border scenarios, and Brazil believes that the BRICS summit, taking place August 22-24, will lead to the formation of common digital currency “working groups.”

Russia’s Central Bank has stated that its digital fiat will roll out nationwide between 2025 and 2027. With this in mind, it appears that BRICS nations are targeting the launch of their CBDCs.

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