In a significant stride towards digitizing national currency, Russia’s central legislative authority, the State Duma, is primed to finalize the ‘digital ruble’ law as early as June, says Anatoly Aksakov, chairman of the Duma’s Financial Markets Committee.
As this transformation looms, it is expected to catalyze the Central Bank of Russia (CBR) to initiate live testing of the digital ruble, a Central Bank Digital Currency (CBDC), amongst real users.
The journey of the digital ruble
The digital ruble was first conceived in October 2020, adding a third dimension to Russia’s financial ecosystem, alongside traditional cash and electronic funds.
The digital ruble operates on a unique digital code, securely stored in an electronic wallet, allowing swift, direct transactions from one e-wallet to another.
The first iteration of the digital ruble bill was presented in January and underwent its initial reading in March. This law decreed the Central Bank of Russia as the exclusive operator of the currency, tasked with ensuring its seamless functionality.
The key provision of the digital ruble law includes providing the CBR uninhibited access to the user’s personal data without the need for explicit consent or obligatory notification to the respective government institution.
However, this has drawn considerable attention from the State Duma, calling for a revision to protect the rights of personal data.
This digital leap emerges against a backdrop of international economic tensions. With Western countries imposing sanctions since 2022, Russia has been strategizing to insulate its financial landscape.
In this vein, the digital ruble is projected as a powerful tool to mitigate the impacts of these sanctions.
Furthermore, the inclusion of the Chinese yuan as a reserve currency indicates a deepening financial alliance between Russia and China. The digital ruble is also expected to streamline bilateral settlements with China, strengthening its anti-sanction armor.
The final countdown
As the digital ruble law teeters on the brink of approval, Aksakov remarked, “The bill on the digital ruble has been submitted, which I think we will pass in the spring session. It has already been passed in the first reading, which means in June it is to be passed in the second and third readings.”
Once the law is sanctioned, the Central Bank of Russia will inaugurate a pilot program for the digital ruble involving actual transactions and customers.
Although initially scheduled for April, the regulator deferred it until the establishment of a legal framework to oversee these operations.
The imminent passing of the digital ruble law underscores Russia’s steadfast push towards a digitized financial landscape.
A successful transition to the CBDC could potentially mark a paradigm shift in how transactions are conducted, not just in Russia but offering a template for worldwide financial digitization.
As the world watches this pioneering effort, June promises to be a landmark month in Russia’s financial history.
