After years of speculation and development, Russia is set to launch a digital version of its national currency, the rouble, in just a few weeks on August 1, 2023. As reported by the Interfax news agency and the Russian government, the country will begin testing the ‘Digital Rouble’ with consumers starting in August, after receiving the green light from the Russian Duma, the lower house of parliament.
The move forms part of a broader global trend, with central banks worldwide exploring the possibilities of implementing Central Bank Digital Currencies (CBDCs). However, Russia, pending President Putin’s approval of the legislative proposition, is poised to become the largest country to adopt a CBDC officially.
The push towards digital money, spearheaded by the Bank of Russia, is designed to modernize the nation’s financial system and create a competitive edge against cryptocurrencies like Bitcoin. This advancement in digital technology has been in the pipeline for several years, with Reuters first reporting on a potential pilot program back in November 2021.
The road to the digital rouble began earnestly in October 2020, when the Bank of Russia published a consultation paper exploring the concept of a state-backed digital currency. The bank is poised to operate and organize the digital rouble platform, following the trajectory laid out in the original consultation paper, according to a press release from the Russian government.
Russia’s move mirrors a global interest in CBDCs, with 93% of central banks showing some level of interest in exploring the implementation of such currencies, based on a 2022 Bank of International Settlements survey. Eighty-six banks responded to the survey, and as of June, 130 countries have launched or are exploring CBDC programs, according to the Atlantic Council CBDC tracker.
In this context, Nigeria stands out as one of the largest nations by population to have established a CBDC with its eNaira. Launched in October 2021, the eNaira did not meet with a warm reception, sparking protests and business closures in response to restrictions on physical cash withdrawals.
The global reception to CBDCs has been mixed, with each country facing unique challenges and rewards as they navigate the digitization of their financial systems. As Russia moves to introduce the digital rouble, the world will be watching closely to see how the country’s citizens and economy respond to this significant shift in their monetary system.
The success or failure of the digital rouble will provide valuable insights for other countries looking to embark on a similar journey, making this a crucial moment not only for Russia but for the future of global finance.
As the world edges closer to a digital financial future, Russia’s move could well set the stage for the next chapter of monetary history. However, the critical question remains: will other major economies follow suit, and if so, how will this change the global financial landscape? Time will tell.
