The Bank of Russia has launched a pilot of a Central Bank Digital Currency (CBDC) with 12 banks, including the largest Russian bank Sberbank, VTB, Gazprombank and Alfa Bank. The central bank said the pilot aims to enable a seamless transition from one form of the ruble to another, to ensure the banks can adapt their systems. The central bank Governor Elvira Nabiullina highlighted some noteworthy points, stating digital technologies will have a profound effect on monetary systems and new types of money will appear. In order to prevent such problems as the fragmentation of monetary systems, and in the extreme, competition between private and public money, central banks need to both design appropriate regulations and build the necessary infrastructure. She said Russia is concerned about the possibility for digital currencies to create far bigger banking monopolies than currently exist, which could crowd out competition. She added that if only the bank’s digital money can be used for payment, it can create a lock-in. A strong bank can build additional comparative advantages by leveraging those existing network effects, leading to more deposits and a lower cost of funding, she added.