Russian President Vladimir Putin has signed the digital ruble bill into law, marking a significant step towards the country’s central bank issuing its own digital currency, according to a document released by the Russian government.
The law, signed on July 24, 2023, will officially come into effect on August 1, 2023. This development follows the bill’s passage through both the lower and upper parliaments, with the State Duma and the Federation Council approving it on July 11 and July 19, respectively.
The digital ruble, a project that the Bank of Russia has been contemplating since 2020, will be used for payments alongside other methods, as per the new amendments to Russia’s Civil Code. The central bank will manage the digital ruble accounts, and the currency is expected to function as the third form of currency in the country, complementing cash and non-cash rubles.
The future of the digital ruble
The digital ruble is not intended for investment but rather as a means of payment and money transfer. The Bank of Russia, which will oversee all stored assets, will serve as the primary operator of the digital ruble infrastructure. The first pilot of the central bank digital currency (CBDC) involving actual consumers will officially be launched in August, following the new legislation. This pilot program was initially planned to launch in April with 13 local banks, including powerhouses like Sberbank.
Elvira Nabiullina, the governor of the Bank of Russia, has emphasized that the use of the CBDC will not be mandated for Russian citizens.
“No one is going to force anyone into the digital ruble… But we really hope that it will be more convenient and cheaper for both people and businesses, and they will start using it. This is a new opportunity.”
Elvira Nabiullina, the governor of the Bank of Russia,
However, the government anticipates mass adoption of the CBDC in 2025 or even 2027, according to Olga Skorobogatova, the deputy governor of the Bank of Russia. Despite this, the digital ruble could potentially become a tool to circumnavigate the massive financial restrictions imposed on the country by the West, especially as Russia faces heavy sanctions from the U.S. and Europe.
The signing of the digital ruble bill into law marks a significant milestone in Russia’s journey toward digital currency, following in the footsteps of its neighbor, China, which is significantly ahead with its digital Yuan project.
