Sberbank Executive States Blockchain Will Solve Issues With Settlements in Russia

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Sberbank Executive States Blockchain Will Solve Issues With Settlements in Russia

The deputy CEO of Sberbank, Alexander Vedyakhin, has highlighted the potential of blockchain technology to solve current issues with settlements in Russia. With the country's major banks disconnected from the global interbank payment system, SWIFT, due to Moscow’s war on Ukraine, blockchain-based payment applications can be developed to solve the problem. Vedyakhin noted that blockchain technology's distributed ledger structure eliminates a single point of decision-making, thereby reducing the likelihood of an abrupt shutdown of the system. Sberbank, along with other financial institutions, is researching blockchain's applications and conducting tests.

In a meeting of the Budget and Financial Markets Committee of the Federation Council, Vedyakhin emphasized that blockchain will become increasingly relevant in 2023, particularly in payment systems. The executive also acknowledged the challenges of using blockchain technology, such as capacity and confidentiality issues. However, Vedyakhin highlighted that these concerns are now resolved in the latest protocols, and blockchain platforms can process large numbers of transactions while maintaining confidentiality.

The U.S. and EU imposed sanctions on a number of Russian banks, including Sberbank, after the invasion of Ukraine in February 2022, limiting Russia’s access to the global financial system. To circumvent the restrictions, Sberbank has begun working on establishing an international settlements system as an alternative to SWIFT, which is expected to be completed within a year. Rostec, a Russian manufacturing and technology conglomerate, announced a similar blockchain-based platform for international settlements. Legalizing crypto payments for cross-border settlements is also being considered as an option.

Blockchain technology has the potential to revolutionize the payments landscape and enhance settlement systems globally. As Russia seeks to find solutions to its issues with SWIFT, blockchain's distributed ledger structure could provide a viable alternative.

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