Digital Ruble Testing to Commence in Mid-August: Russia’s Move Towards Central Bank Digital Currency

Share Story

In a significant move that highlights Russia’s ongoing shift towards digital currencies, several of the country’s banks will begin testing the nation’s newly minted digital ruble with actual clients by mid-August. The impending trials follow shortly after Russia formally established laws pertaining to the implementation of its digital currency.

Banks participating in the pilot program for the digital ruble project will launch trials involving real transactions between users in the coming weeks, stated Stanislav Danysh, Chairman of the Board of Ingosstrakh Bank. The tests will encompass digital ruble transfers between participating banks, retail and corporate clients, as well as digital ruble payments for goods and services between companies.

Given the significance of the initiative, initial testing will be conducted on a scaled-down level with a limited number of participants, which will include employees and partners of the bank, Danysh noted.

The digital ruble is a central bank digital currency (CBDC) issued by the Central Bank of Russia (CBR), which will solely operate its platform. Digital ruble transfers will not involve any charges for private individuals, while businesses will incur a commission of 0.3%.

CBR Governor Elvira Nabiullina has projected a widespread adoption of the digital ruble by the start of 2025. She added that the pilot program set to commence this year will gradually expand to encompass contactless payments using NFC technology by 2024.

Earlier this month, both chambers of Russia’s Federal Assembly — the State Duma and the Federation Council — passed legislation designed to streamline the implementation of the digital ruble. Russian President Vladimir Putin subsequently signed the bill into law.

The new legislation paves the way for digital ruble payments throughout Russia, while effectively barring the use of other digital financial assets for payments. First Deputy Chairman of the Bank of Russia, Olga Skorobogatova, clarified that the digital ruble is neither a cryptocurrency nor a stablecoin. She affirmed that it could potentially replace SWIFT transfers, enabling citizens to send and receive money freely.

The advancement of the digital ruble initiative forms part of Russia’s broader efforts to mitigate the impact of Western sanctions, including those affecting its financial and banking sectors, following its invasion of Ukraine. Nabiullina recently disclosed that the CBR is examining avenues to integrate the digital ruble platform with other CBDC systems to facilitate the use of the Russian digital currency in cross-border settlements.

Even as Putin has officially sanctioned the use of the digital ruble, Russian authorities anticipate that the CBDC’s full adoption will take several years. Most citizens are expected to gain access to online wallets only by 2025, as per Skorobogatova.

The digital ruble is a centralized token with its value pegged to the national fiat currency. The concept gained urgency in the wake of Western sanctions triggered by Russia’s incursion into Ukraine, which led to an acceleration in legislative measures to fast-track the CBDC. These sanctions, coupled with escalating inflation, have resulted in the Russian ruble being considered one of the world’s worst-performing currencies.

Under the new law, Russians will be able to make payments and transfers from their digital wallets, managed by the central bank’s platform or one of its partner banks. However, the digital ruble can only be utilized for payments or transfers, and not for loans or deposits, according to the central bank’s stipulations.

Despite the progress in the CBDC realm, Russia’s central bank governor, Elvira Nabiullina, emphasized that Russians would not be coerced into adopting the digital ruble. However, she expressed hope that its convenience and cost-effectiveness would encourage greater acceptance among people and businesses, thereby providing a new avenue for financial transactions.


Share Article

Related Posts

This is articles having same tags as the current post.