Russia Moscow Credit Bank Issues Bank Guarantee Denominated in “Chinese Yuan” on Blockchain

digital bank guarantee

Russia’s Moscow Credit Bank (MKB) announced today that it has issued the country’s first digital bank guarantee using blockchain.

Denominated in Chinese yuan, the face value exceeds 100 million yuan (approximately 1.98 billion yen). It adopted the blockchain “Masterchain” platform developed by the Bank of Russia (central bank).

The advantage of issuing a bank guarantee on the blockchain is that the recipient does not have to wait for the paper document to arrive as it is a digital document that cannot be forged or lost, and the bank does not need to know the authenticity of the document. MKB points out that there is no need to check separately.

This bank guarantee is denominated in renminbi because the importer’s contract is pegged to the Chinese currency, and if payment is made under the guarantee, the beneficiary will Receive Russian rubles at the rate.

According to Natalia Bakova, Head of International Structured Finance at MKB, most foreign trade contracts are in Chinese currency, and the demand for renminbi settlement is only increasing. Digital bank guarantees are “a logical step for the market,” she said, and that there will be more cases like this in the future.

reduce reliance on the international financial system

As the United States and other Western countries impose sanctions over its invasion of Ukraine, Russia has sought to evade sanctions by using the US dollar and traditional financial systems, including the use of non-dollar trade settlements, blockchain technology and cryptocurrency settlements. We have been looking for ways to reduce our reliance on

As a payment system using the domestic currency, bilateral settlements with Russia in India (rupee), Iran (riyal), and China (renminbi) were in operation last year. In 2014, Russia was sanctioned by the United States and Europe for its invasion of Crimea. It has been fully operational since.

Furthermore, President Putin announced at a meeting related to the BRICS Summit in June last year that he was working on developing a reserve currency based on a basket of currencies of member countries such as China and India.

Due to differences in opinion between the central bank and the Ministry of Finance, legislation on the use of virtual currencies has been slow to progress. Both institutions seem to have taken a more positive stance.

In September last year, it was reported that the Ministry of Finance and the central bank had reached an agreement on a bill on the use of cryptocurrencies for international payments.

connection:Russia agrees bill to use cryptocurrencies for international payments: report

Issuance of gold-backed stablecoins

According to a September report by TASS, Russia has started working with several friendly countries to build a platform using stablecoins.

In Russia, in 2019, the idea of ​​issuing a gold-backed stablecoin surfaced at the state parliament attended by Bank of Russia Governor Elvira Nabiullina. The central bank governor has expressed a positive attitude toward real asset-backed stablecoins.

Deputy Finance Minister Alexei Moiseyev last September confirmed plans to issue stablecoins backed by gold. In January of this year, the head of the Financial Markets Committee of the Duma of the Russian parliament, Anatoly Aksakov, said he was considering creating a gold-backed stablecoin for bilateral trade settlements with Iran. rice field.

connection:Russia to Adopt Stablecoins for International Trade Payments: Report

Advancement of CBDC trial operation

Russia’s central bank announced in February that it would begin testing a central bank digital currency (CBDC) on April 1. 13 local banks and several retailers will participate.

Initially, the trial operation of CBDC for general consumers was scheduled for 2024, but as economic sanctions against Russia continue, they would like to promote the development of a digital ruble as one of the alternatives to SWIFT’s payment system. There seems to be speculation.

connection:Russian Central Bank Issues Agreement on Digital Assets

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