Russia is making progress with its central bank digital currency (CBDC). President Vladimir Putin approved the digital ruble law and signed it into law on July 24. approvalthe law on the digital ruble will officially come into force from August 1, 2023.
The digital ruble will serve as a complementary form of the Russian national currency. It will run alongside the existing cash and non-cash forms.
This development means that the Russian ruble will exist in three different forms. This includes physical cash, non-cash transactions (such as electronic transfers and online payments) and the newly introduced digital version.
The digital ruble will mainly function as a medium for payments and transfers. However, opening a bank account with digital rubles or obtaining a loan in digital rubles is not possible.
The recently passed legislation now authorizes the Russian central bank to conduct the first CBDC pilot with real consumers. Previously, the government planned to begin trials in April. It was to partner with multiple local banks, including major institutions such as Sberbank.
Russia’s central bank will become the main operator of the digital ruble
According to the newly passed law, the Russian central bank will assume the role of the main operator for the digital ruble infrastructure. It will be responsible for protecting the stored assets.
In addition, persons or entities that are not operators or participants in the digital ruble platform are prohibited from using the term “digital ruble platform” to their advantage. This includes banning related words and phrases in their ads.
Elvira Nabiullina, the governor of the Bank of Russia, has stated that Russian citizens will not be required to use the CBDC. The use of the digital ruble is completely voluntary. The decision to adopt the CBDC rests with the individuals.
Nabiullina stated:
No one is going to force anyone to introduce the digital ruble […] But we really hope it becomes more convenient and cheaper for both people and businesses, and they start using it. This is a new opportunity.
Provisions for the inheritance of digital rubles
The document outlines provisions for the inheritance of digital rubles. It allows individuals to transfer their rights to these digital assets through testamentary dispositions or wills. The Russian government, in cooperation with the Bank of Russia, will determine the process and rules for issuing such orders.
This ensures that digital rubles can be transferred or inherited according to the legal framework set by the authorities. It makes it possible to adequately manage and distribute these digital assets during the death of an individual.
However, the government does not expect the digital ruble to be introduced on a large scale in the short term. Mass adoption is not expected to happen before 2025 or possibly even 2027, as Bank of Russia deputy governor Olga Skorobogatova has stated.
Featured image from BBC, chart from TradingView.com