Proof-of-concept with consumer participation to start
Russian President Vladimir Putin signed a bill on the digital ruble on the 24th. In response, Russia aims to start piloting a central bank digital currency (CBDC) for real consumers from August.
The law makes it possible to make payments in Russia’s CBDC, the digital ruble, in accordance with the law on national payment systems.
Digital rubles can be bequeathed and can be received by heirs. The law will come into force on August 1st.
According to local media, it is free for citizens to send and pay in digital rubles. If a company accepts payment in digital rubles, the Russian central bank collects 0.3% of the payment amount.
Bank of Russia Governor Elvira Nabiullina said the use of the digital ruble is not compulsory.
There is no compulsory digital ruble. Using it is completely voluntary and gives people an additional option to their traditional payment methods.
Nabiullina said the digital ruble is expected to be more convenient for people and businesses, and that it will bring “new opportunities”.
According to the newly enacted law, the central bank of Russia will be the main operator of the digital ruble infrastructure. The digital ruble will also serve as a means of payment and remittance, but not for investment purposes.
It should be noted that the widespread adoption of the digital ruble in Russia is still a long way off. “Between 2025 and 2027, I think every citizen will be able to open a wallet and receive and spend digital rubles,” said Olga Skorobogatova, Deputy Governor of the Russian Central Bank.
The process will be phased and will also depend on the progress of connecting the CBDC platform with the private banking system, he added.
What are CBDCs
A digital currency issued by the central bank of a country or region. It stands for “Central Bank Digital Currency”. The big difference from virtual currency is that CBDC is a legal tender. While cost reduction and efficiency improvement can be expected in currency management and settlement, there are many issues to be considered, such as protection of personal information and privacy, security measures, and impact on the financial system.
From 2022, Russia will launch a digital ruble pilot program in cooperation with commercial banks. In February of the same year, it successfully traded digital rubles between customers using the bank’s mobile app.
The mobile app allows users to open wallets on the digital ruble platform, convert account funds into digital rubles, and transfer money to other users.
connection: Russian central bank begins trial of digital ruble, maintains negative stance on virtual currency
Virtual currency situation
Regarding private-sector crypto assets (virtual currencies) such as bitcoin, Russia has not yet established legal arrangements, and virtual currency settlements within the country are currently prohibited.
At the same time, however, their use in international trade is permitted, especially against the backdrop of economic sanctions following the invasion of Ukraine.
In June, major Russian bank Rosbank began operating a cross-border payment system using cryptocurrencies.
connection: Major Russian bank Rosbank to start offering cross-border payment service using virtual currency = news