The Bank of Russia released the amendments to the Regulation No. 383-P “On Money Transfer Rules”, covering the use of blockchain technology in transactions. The implementation of digital letters of credit and smart contracts will allow financial organizations to cut their expenditures by 20%.
The legislative developments will enable the parties to commercial transactions to take advantage of using digital letters of credit and smart contracts. These new tools will accelerate transactions and reduce transaction costs by 20% on average, they believe in FinTech Association. The technologies will be made legal and open to public use in 2019.
According to the Bank of Russia’s statement, digital letters of credit will drastically reduce transaction settlement time. This means that the average transaction settlement term will be just 8 days instead of current 18 days.
As noted earlier by the Deputy Head of the Bank of Russia Olga Skorobogatova, “Masterchain” will most likely be chosen as the main blockchain platform for such transactions. Digital letters of credit will become available this year already, whereas 2019 will see the mass adoption of the technology.
Not only will the revised Regulation enable settlement participants to send documents by email, but also transfer them via distributed electronic systems, thus, enhancing the transparency of all operations.
As reported earlier, Russian financial authorities plan to switch the Financial Messages Transmission System, which is the Russian equivalent of SWIFT, to blockchain by 2019. The exact date of the project fulfillment will be determined by the joint working group of representatives of the central banks of the EAEU member countries.