Russia’s upper house of parliament will soon pass the legislation to approve the commencement of pilot tests of Digital Ruble. By Bhushan Akolkar 1 hour ago Updated 1 hour ago
As Russia faces international isolation over its war with Ukraine, the country prepares to introduce Digital Ruble, joining other countries to experiment with its electronic money.
On Wednesday, July 19, Russia’s upper house of Parliament – the Federation Council – will pass the legislation to approve the creation of national digital currency. Once the legislation is signed into law by President Vladimir Putin, the Bank of Russia is likely to begin tests of the Digital Ruble CBDC as soon as next month.
The Bank of Russia is launching a test program with 15 Russian banks to offer digital wallets to individuals and businesses. These wallets will be accessible through any Russian bank. Individuals can make transactions with the Digital Ruble for free, while companies will be charged a 0.3% fee on transactions, as per the bank’s guidance.
Combating Economic Challenges With Digital Ruble
The Bank of Russia is moving forward with the CBDC project following the implementation of sanctions by the US and its allies, which disconnected Russian banks from the global financial system. In response to these sanctions, foreign banks have adopted stricter policies regarding payments from Russia.
As a result, Russia aims to reduce the impact of sanctions by increasing trade in national currencies with countries like China and India, which have taken a more neutral stance on the conflict. Earlier this month, Nikolay Zhuravlev, deputy chairman of the Federation Council, said:
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“In the current environment, it is important to have independent payment instruments and financial information channels that can be used in our trade with foreign partners”.
However, Alexandra Prokopenko, a former adviser at the Russian central bank said that those hopes might be too optimistic at this point since for international transactions to happen, the Digital Ruble would need to be connected to other countries’ currency platforms. However, there’s no indication of progress in that direction at the moment.
Prokopenko said: “So far, the digital ruble resembles a points system in the loyalty program of the ‘Fortress Russia’ corporation,” potentially making transactions more convenient inside the country. “It also possibly will make transactions more transparent in the territories annexed from Ukraine as now everything is done through cash.”
Previously, Russia was also planning to establish a national crypto exchange to facilitate crypto trading. However, they have abandoned the plan for now.