Russian economic chiefs have claimed a national first after one of the country’s largest banks used the central bank’s digital currency to secure a government contract for construction work on the Moscow Metro.
The deal was overseen by the banking heavyweight VTB Bank and saw Mosinzhproekt, the Moscow government’s engineering arm, pay an unspecified amount to several unnamed building contractors.
A CBDC is a digital version of a country’s official fiat currency. It is typically issued and backed by its central bank.
While few countries have officially rolled out their CBDCs, many, including China, have begun advanced pilots, some with their international counterparts.
Late last year, the Russian capital announced plans to build 13 new metro stations and add 27 kilometres worth of lines by 2028.
And the city wants to use the digital ruble, Russia’s CBDC, to help it complete its project.
“The introduction of the digital ruble into the financial and economic activities of Moscow city bodies will continue," said Maria Bagreeva, the Deputy Mayor of Moscow, per an official release. ”We expect an increase in the number of payments.”
The digital ruble is currently in pilot testing ahead of a nationwide rollout on September 1, as the global race to establish CBDC dominance intensifies.
Russian officials say they want to use the CBDC’s smart contract functions in government contracts and welfare payments to prevent fraud and corruption.
Metro CBDC testbed
“The deal was unique in that four contractors simultaneously received transfers, instantly from our digital ruble wallets,” a senior Moscow official said.
The city said it will use the digital ruble to pay for more infrastructure projects in the capital. Mosinzhproekt is planning to start using the CBDC to pay for equipment rentals.
It is also considering using the coin to pay its staff’s wages and cover expenses.
“[Using the digital ruble] allows for greater convenience, speed, and transparency,” said Maxim Gaman, CEO of Mosinzhproekt.
The Moscow government says using the digital ruble will “ultimately lead to a more efficient use of the city’s budget.”
The Russian central bank unveiled details of its digital ruble project in 2021, followed by real-world pilots in 11 cities in August 2023.
The Moscow Metro has become an informal testbed for the CBDC.
The metro system announced a pilot in 2023 that allowed a small number of Moscow residents to use their digital ruble holdings to top up the balances on Troika smart transport cards.
