Russia's Central Bank tests blockchain messaging system

Russia’s Central Bank is testing blockchain technology with a select few partner banks through a new alliance — but it won’t involve the previously mentioned “Russian Bitcoin.”

Russia's Central Bank tests 'cryptographic technology'

Speaking at the International Finance Conference in St. Petersburg on June 3-4, Deputy Governor Olga Skorobogatova said a new ‘consortium’ had been established to “study and implement this very promising technology of blockchain cryptography.”

“Many major banks and several companies have already confirmed their intention to join the alliance,” she said. “We have created a prototype of a blockchain-based information system that will soon be tested with market participants.”

Russia has so far been critical of bitcoin and has said it will develop its own centralized “quasi-currency” with banks controlling its issuance.

Blockchain technology itself is good, and Russia is exploring the technology to simplify banking processes and work with other institutions to create a gateway to global finance.

Skorobogatova went on to say that the messaging system will likely first be used for ISO, SWIFT and other standards, with the next step being to move to blockchain payments, local news outlet Kommersant wrote.

Russian R3CEV competition?

Participants in the alliance include QIWI – a mobile payments company that has been investigating the use of crypto tokens, online bank Tinkoff and Russian consulting firm Accenture. Notably absent from the alliance are Russia’s largest bank Sberbank and VTB Group, which had previously planned to join the R3CEV alliance.

“Blockchain has the potential to solve long-standing problems in the financial industry and transform various relationships between market participants,” commented Sergey Solonin, CEO of QIWI.

His comments were echoed by Binbank and KMB Ortkritiya, both of which suggested caution in practice to avoid huge fluctuations.

“We are currently evaluating and selecting test locations,” said Dmitriy Kashtanov, Binbank’s digital director. “One of the most anticipated areas is registration and transfers, as well as smart contracts.”

KMB’s Sergey Mendov went on to say that there are already several areas where the technology could be implemented, but the bank would focus on simple use cases first.

The central bank has set up a working group in February to actively study blockchain technology and its potential applications. At the same time, from a legal perspective, the prospects for unregulated technologies such as Bitcoin remain bleak.