Russian President Vladimir Putin has signed into law a bill that paves the way for creating a Central Bank Digital Currency (CBDC), the digital ruble. This development, confirmed on July 24, marks a significant milestone in Russia’s financial landscape.
The path to the digital ruble
The digital ruble bill was passed by both the lower and upper parliaments before receiving the presidential assent. The law, which was initially registered in December 2022, was passed by the State Duma, Russia’s lower parliament house, in its third and final reading on July 11. Subsequently, the Federation Council, or Senate, gave its approval on July 19.
With the president’s signature, the digital ruble law is officially set to go into effect on August 1, 2023, with all but one rule prepared for enforcement. This development brings Russia in line with its neighbor, China, which is significantly ahead with its digital Yuan project.
Previously, the government had planned to launch trials with 13 local banks, including powerhouses like Sberbank, in April.
The central bank of Russia will be in charge of overseeing all stored assets. It will serve as the primary operator of the digital ruble infrastructure, as per the recently signed law. The digital ruble is not intended for investment; rather, it is intended to be used as a means of payment and money transfer. The digital ruble is intended to function as the third form of currency alongside cash and non-cash rubles.
Voluntary adoption and future expectations
On July 24, Elvira Nabiullina, the governor of the Bank of Russia, reportedly said that the use of the CBDC will not be mandated for Russian citizens and that it will be their choice whether to do so. She expressed hope that the digital ruble will be more convenient and cheaper for both people and businesses, and they will start using it. This new opportunity is seen as a new way to connect people in ways we’re just beginning to imagine.
However, the government doesn’t anticipate mass adoption of the CBDC before 2025 or even 2027, according to the deputy governor of the Bank of Russia, Olga Skorobogatova. Despite this, the signing of the digital ruble bill into law marks a significant step towards the digitalization of currency in Russia and sets the stage for similar developments in other countries.