Russia changes digital ruble law while central bank investigates prototype

On Tuesday, Russia’s central bank governor Elvira Nabiullina said the country will have a prototype of its digital ruble platform by early 2022 and will test it next year before a final decision is made to issue its own digital currency, according to a Reuters report .

In the meantime, Russian lawmakers are expected to start working on the necessary legal adjustments to align the plan for the digital ruble with the digital currency. According to Izvestia, the chairman of the State Duma committee on financial markets, Anatoly Aksakov, stated that these regulatory changes will begin as soon as an attempt at central bank digital currency is launched.

At least eight federal laws and five codes of law, including the Civil Code, the Tax Code, the Financial Regulation, the Criminal Code and the Administrative Code, must be amended for the digital ruble to take effect. The new rules will cover a number of issues such as the power of the Central Bank of Russia to establish circulation for the new currency, its acceptance as a means of payment, etc., deposit reports.

According to the report, the study will be carried out in phases. In the first phase, CBR will provide digital currency. The network size of the pilot will be expanded, starting with 12 banks.

According to previous reports, the CBR set up a group of financial firms to study the central bank’s digital currency. However, recent reports suggest that the functionality of the banking system will continue to expand.

The participating banks include large Russian banks such as the state-backed Sberbank and VTB, as well as powerful private banks such as Tinkoff Bank. Bank of Moscow, Transneftbank, Gazprombank, Promsvyazbank, Rosbank, Ak Bars Bank, Dom.RF, SKB-Bank, TKB and Soyuz Bank are among the banks that have signed up for the pilot program for the digital ruble.

The Russian central bank announced its CBDC strategy until the end of 2020. In January, the Association of Russian Banks criticized the project, saying that any model proposed by the Russian Central Bank may pose some security and fraud risks.

In response to the increasing use of Bitcoin (BTC) and the declining use of cash, a number of central banks around the world have been investigating the possibility of issuing CBDCs. These include the European Central Bank and the People’s Bank of China.