Russia Takes A Leap Into The Future: Digital Ruble Set To Revolutionize Payments By 2025
- Russia’s President signs the digital ruble bill into law, paving the way for the launch of the country’s central bank digital currency (CBDC).
- The digital ruble is scheduled to take effect from August 1, 2023, with pilot trials planned for August involving real consumers.
- The CBDC will serve as a payment and money transfer method, offering traceable transactions and providing citizens with a voluntary third form of money alongside cash and non-cash rubles.
In a significant move, Russia is making strides towards the implementation of its central bank digital currency (CBDC) as President Vladimir Putin signed the digital ruble bill into law on July 24, as stated in an official government document. The enactment of this bill sets the official commencement date for the digital ruble law, which is scheduled to take effect on August 1, 2023, with almost all regulatory aspects ready for enforcement.
The new legislation confers the Russian central bank with the authority to launch the first pilot of the CBDC involving real consumers in August. The government had previously planned to initiate pilot trials in April, collaborating with 13 local banks, including major institutions such as Sberbank.
Under the newly passed law, the digital ruble will function primarily as a payment and money transfer method, not as an investment instrument. It is intended to complement cash and non-cash rubles, providing citizens with a third form of money. Importantly, the adoption of the digital ruble will remain voluntary, and citizens will not be compelled to use it, as reassured by Bank of Russia governor Elvira Nabiullina.
The digital ruble infrastructure will be operated and maintained by the central bank, which will be accountable for safeguarding all stored assets. According to Bank of Russia deputy governor Olga Skorobogatova, the government does not anticipate widespread adoption of the digital ruble before 2025 or possibly even 2027.
The process leading up to the implementation of the digital ruble witnessed the State Duma, Russia’s lower house of parliament, passing the digital ruble bill in its third and final reading on July 11. Subsequently, the Federation Council approved the bill on July 19. The initial registration of the digital ruble bill took place in December 2022.
The exact operational details of the digital ruble platform are yet to be finalized by the central bank’s board. However, it has been disclosed that private individuals will not be subject to fees for payments or transfers in digital rubles, while companies will be charged a nominal 0.3% fee.
The primary purpose of the CBDC is to facilitate cheaper and faster transactions, focusing on serving as a means of payment and fund transfers. Additionally, the digital ruble will offer increased traceability compared to existing non-cash payment solutions, enabling more transparent tracking of payment flows and identifying all transaction participants.
The law’s effective date is August 1, 2023, but the actual launch of the digital ruble is not expected until 2025, with pilot projects slated for 2023 and 2024, targeting a limited number of customers and specific types of transactions.
The introduction of the digital ruble marks a significant milestone in Russia’s journey towards CBDC adoption, which has been under discussion for several years. While progress is evident in the CBDC arena, Russia continues to postpone the introduction of cryptocurrency regulations.
Despite the advancements with the CBDC, Russia’s stance on cryptocurrencies remains unaltered, with payments and trading still prohibited. The draft law ‘On Crypto Currencies’ is still under review, with the latest version maintaining the ban on cryptocurrency payments. However, there are provisions for the utilization of cryptocurrencies in foreign payments, possibly to navigate international payment restrictions in light of geopolitical developments.
With the legal groundwork laid for the digital ruble, Russia is now poised to explore the possibilities and implications of a CBDC and its potential impact on the country’s economy in the coming years.