The European Union (EU) has finally announced 7 Russian banks have been dropped from the messaging system that works to implement remittances and payments between banks around the world, SWIFT.
Banks involved include: VTB, Otkrities Bank, Novikombank, Promsvyazbank, Rossiya Bank, Sovcombank, and VEB.
The banks were given a period of 10 days to cease their operations with SWIFT.
Even so, does this mean that the Russian economy will be ‘damaged’ because of this EU order?
The line of economists is of the opinion NO because of the presence of the digital ruble as the savior of the country’s economy.
For the record, in the third week of February, Russia has successfully conducted central bank digital currency (CBDC) testing for the first phase.
12 banks were listed for the testing but due to lack of IT system facilities, only three were involved and two of them actually managed to conduct the testing.
The success of indirect digital ruble testing is enough to give a clear picture of how CBDC interacts with Russian clients and banks.
Economists are confident that the presence of the CBDC in Russia will further reduce the influence of the dollar, thus eliminating the ‘slap’ of sanctions imposed recently.
In any case, Russia has long been active in deregulation since 2014.
The proof is, Russia has reduced some of its reserves in dollars and its holdings against the US Treasury. Now a commodity asset owned by Russian reserves, gold outpaces US dollar ownership.
No wonder why the Institute of International Finance (IIF) is confident the digital ruble will reshape the Russian economy to be stronger than ever.
Much like the COVID-19 epidemic that boosted the digital economy and work from home applications, the pressure Russia has received as a result of invading Ukraine will further accelerate the adoption of alternative payments and self-service retailing.
