Vneshecomombank, (VEB), a development bank that is owned by the Russian government and meant to fund the projects aimed at the development of Russian economy, has recently signed a contract with Kaliningrad regional government to create a pilot version of the new payment system that is going to be based on blockchain technology.
The meeting took place last week and included the governor of Kaliningrad Anton Alkikhanov and the chairman of VEB Sergei Gorkov. Alikhanov and Gorkov met in Sochi, at the Russian Invenstment Forum (an annual event “for pesenting Russia’s inventment” attended, among others, by Dmitry Medvedev, the Prime Minister of Russian Federation). The two officials signed the agreement laying the foundations for testing the new technology. Alikhanov stated that “the competence of the bank’s development lies in the area of the blockchain technology” which is expected to help Kaliningrad, the westernmost region of Russia, to “improve the quality of the administrative decisions”.
Gorkov was also very optimistic about the innovative project. In his statement, he called Kaliningrad “one of the most active subjects of Russian Federation in the area of implementing advanced technologies which support the development of Russia’s digital economy.” He also said that the pilot blockchain project “touches upon the social sphere – the area in which one of the basic functions of the state is actualized. Implementing the new technologies allows to significantly improve the quality of these services – enhance the transparency of the system, get rid of the unnecessary paperwork, simplify the service and make it more comfortable for the citizens.” In addition to these prospective benefits, according to VEB chairman, the integration of the blockchain technology can help Russia save a lot of money: “Blockchain technology will give us the opportunity to save the expenses in this area, which currently comprise trillions of rubles across the country.”
Previously, there have already been attempts to research the potential of blockchain implementation for the public sector, when Russian government decided to test a land registry system based on blockchain, but the agreement signed between VEB and Kaliningrad is a significant new aggregation of public and private interests.
The parties plan to work together to bring cutting-edge technologies and solutions to Kaliningrad region to enhance the efficiency of the corporate and state management. The expertise to support the project in the area of social payments using blockchain technology will be provided by the Blockchain Technology Research Center, an initiative of VEB that was revealed in the autumn of 2017. VEB has worked together with Ministry of Economic Development, the Ministry of Communications and Mass Median, and the Ministry of Finance to “create the first center that focuses on blockchain and quantum technologies at the National University of Science and Technology (MISIS)”, as Sergei Gorkov said in his press release. He also added that there were plans “to create a group on investment funds with external financing from both Russian and foreign investors.”
In recent years, Russia has expressed increasing interest in blockchain and in its possible application in the area of public services. As early as August 2017, Vladimir Demin, advisor to the VEB’s Chairman, said that VEB aims at changing the paradigm of the state’s functions, and that blockchain is likely to completely transform Russia within five years. According to Demin, “I presume that, if someone falls into lethargic sleep today and wakes up in five years, they will not recognize the country.”