Putin approves Digital Ruble Law for Russia’s Central Bank Digital Currency

Putin approves Digital Ruble Law for Russia's Central Bank Digital Currency

Russia’s Digital Ruble: A Step Towards Financial Innovation

Source: Pixabay

Russian President Vladimir Putin has recently signed a bill that paves the way for the introduction of a digital version of the country’s national currency, the ruble. This move grants legal authority to the Bank of Russia, the country’s central bank, to act as the platform operator for the digital ruble. Under the newly signed law, the central bank will be responsible for managing the digital ruble accounts and infrastructure, as well as holding responsibility for all stored assets.

The digital ruble is set to become a new form of payment, alongside cash and non-cash rubles. Starting from August 1, the Bank of Russia will commence tests of the Central Bank Digital Currency (CBDC). It is important to note that the usage of the CBDC is not compulsory for Russian citizens. Instead, individuals will have the freedom to decide whether or not to adopt the digital ruble.

Bank of Russia governor Elvira Nabiullina expressed her hopes that the digital ruble would offer increased convenience and cost-effectiveness for both individuals and businesses, presenting a new opportunity. She emphasized that there are no plans to force anyone to use the CBDC; however, the central bank hopes that the benefits of the digital ruble will encourage its widespread adoption. This approach reflects the principle of blockchain technology, which prioritizes user choice and empowerment.

The idea of a digital ruble has been under discussion in Russia for a number of years. However, the concept gained significant traction following the imposition of sanctions by the United States and its allies. These circumstances have prompted Russia to accelerate the development and launch of the CBDC, leading to the swift passage of the bill in both houses of the nation’s parliament.

The Bank of Russia has been actively working on the development of the digital ruble, with pilot tests conducted in collaboration with several banks in the country. The outbreak of the war in Ukraine further highlighted the need to implement the digital ruble as a means to mitigate the impact of Western sanctions. Russia’s move towards CBDC development aligns with the global trend, as 21 other nations have already launched pilot programs for CBDCs.

The Atlantic Council CBDC tracker reveals that 130 countries, representing 98% of global GDP, are currently exploring the implementation of a CBDC, while 19 G20 countries are in the advanced stages of their CBDC development. Notably, China, The Bahamas, Nigeria, Anguilla, Jamaica, and seven Eastern Caribbean countries have already fully launched their CBDCs. However, the United States has not yet confirmed plans to launch a digital currency, though it is actively pursuing the development of a wholesale (bank-to-bank) CBDC.

Since Russia’s invasion of Ukraine and the G7 sanctions response, wholesale CBDC developments have doubled, with 12 cross-border wholesale CBDC projects currently in progress. It is evident that blockchain technology is shaping the future of global finance, with governments and central banks recognizing the potential benefits of CBDCs.

In conclusion, the introduction of Russia’s digital ruble reinforces the country’s commitment to financial innovation and its desire to adapt to the evolving global economic landscape. By embracing blockchain technology, Russia aims to enhance the convenience and efficiency of its payment systems. Furthermore, the rise of CBDCs worldwide indicates a growing recognition of the transformative power of blockchain in reshaping traditional financial practices. As blockchain continues to garner attention and adoption, it is reasonable to expect further advancements and applications in various sectors, ultimately leading to a more secure and interconnected global economy.

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