Gazprombank, which is a unit of the main Russian government-owned gas business Gazprom, has openly recommended that banks be given more time before the implementation of digital currency. Due to international financial restrictions and rising geopolitical tensions, the progress of the country’s central bank digital currency (CBDC) initiative has accelerated.

As local media reported on February 7, Gazprombank, one of the 15 banks participating in the CBDC pilot, issued a public statement advising to proceed with caution regarding the interests of traditional banks. The statement said: “It is imperative that banks take steps to mitigate potential losses.” As a result, it is of the utmost importance to be aware of the possible dangers that are associated with the transition to a digital ruble and to approach its implementation extremely carefully, giving the monetary system time to readjust.

However, the statement acknowledges that the CBDC will contribute to further openness in the entire Russian economic and financial system.

McKinsey’s Russian division estimated that conventional banks could suffer losses of around $3.5 billion (250 billion rubles) in the first five years as a result of CBDC adoption. During the same period, the consultancy predicted that the stores would make an annual profit of $1.1 billion.

The planning stages of a CBDC began in Russia around the year 2020. The transition to the digital ruble is expected to be completed this year, which is currently being tested for settlement with banks. The most recent monetary policy update from the Bank of Russia indicates that the regulator would start the process of connecting all banks and credit institutions to the digital ruble network in the year 2024.

In addition, the Central Bank of Russia has started the process of creating a cross-border settlement system that will use a CBDC. When Russia launched a full-scale invasion of Ukraine in late February 2022, the nation was already facing mounting financial and economic sanctions as a result of the escalating conflict between Russia and Ukraine.