The Digital Ruble Could Render Traditional Banking Institutions Obsolete, Says Head of Russian Banking Commission

Anatoly Aksakov: Digital Ruble Could Render Traditional Banks Obsolete

Anatoly Aksakov, head of the Russian Banking Commission, believes that the digital ruble could make traditional banking institutions obsolete.

In a discussion at the AiF.Media Club, Aksakov argued that the evolving fintech landscape could reduce the necessity of traditional banking institutions. However, no official plans have been made to phase out banks in Russia.

“The future of banking could undergo a major transformation due to the advancement of blockchain technology and central bank digital currencies.”

Anatoly Aksakov, Chairman of the Banking Committee of the Russian State Duma

Although Russia’s central bank has not yet enabled loans in digital rubles, Aksakov is optimistic that this is the logical next step. It is believed that financial transactions would be faster and possibly more efficient if they were conducted in digital rubles.

Moreover, Aksakov contends, the automation facilitated by this digital technology could render traditional banks obsolete.

“In the future, decisions are likely to be automated, eliminating the need for human intervention. This could make the traditional banking institution redundant as the digital ruble becomes increasingly technological.

Anatoly Aksakov

Since Russia’s massive invasion of Ukraine in late February 2022, which escalated the Russo-Ukrainian War, the country has been hit with severe financial and economic sanctions that have since prompted its authorities to explore cryptocurrencies as a payment option for offshore transactions.

In September 2022, an agreement was reached between the Bank of Russia and the Ministry of Finance on a regulation allowing Russians to send cross-border payments using cryptocurrencies.

In this context, Russia has started a pilot program to evaluate the function of the digital ruble in partnership with various banking institutions.

However, the introduction of the digital ruble will not change or improve the geopolitical situation in which Russia finds itself. Furthermore, officials stated that CBDC platform trials can only be conducted with countries that are “friendly” to the Russian government and technically capable.