Vnesheconombank (VEB), the Russian state-owned development bank, has inked a deal with the regional government of Kaliningrad to pilot a new blockchain-based payment system.

Last week, officials including Kaliningrad governor Anton Alkikhanov and VEB chairman Sergei Gorkov met at the Russian Investment Forum in Sochi to sign the agreement underpinning the trials. Alikhanov said in a statement that the development bank’s “competence in the area of blockchain technology” will help Russia’s westernmost region to “improve the quality of management decisions.”

The regional government and its development bank partner are betting that the technology will improve the quality of social services by increasing transparency and cutting costs. Elements of Russia’s government have previously trialed blockchain as part of research into potential public-sector applications, but the VEB deal represents a notable pairing of private and public interests.

They plan to collaborate to bring modern IT solutions to the region, namely blockchain-based “social payments” and electronic services “to improve the efficiency of public and corporate governance.”

“The Kaliningrad region is one of the most active subjects of the Russian Federation in terms of implementing advanced technologies that support the development of Russia’s digital economy,” Gorkov said according to the statement.

As previously reported by CoinDesk, Vnesheconombank has shown a sustained interest in blockchain technology. In 2017, the bank unveiled a blockchain product strategy and a blockchain-focused research center, both aimed at improving the institution’s knowledge of the technology while providing an environment to try out use cases.

Map featuring Kaliningrad via Shutterstock