Digital Ruble Bill Signed by President Vladimir Putin Allowing Russia's Central Bank to Introduce CBDC

Russia's CBDC could help the country circumvent sanctions imposed by Europe and the US.

Written by Radhika Parashar, Edited by David Delima | Updated: 25 July 2023 14:35 IST

Digital Ruble Bill Signed by President Vladimir Putin Allowing Russia's Central Bank to Introduce CBDC

Photo Credit: Facebook/ Vladimir Putin

CBDCs are blockchain-backed virtual representations of fiat currencies

Highlights

Russia began working on its CBDC in 2020
It accelerated its development around CBDCs in 2022
Russia is currently facing sanctions due to the Ukraine conflict

Russia is inching closer to facilitating a widespread roll out of its CBDC, the digital ruble. A bill, that proposed the legalisation of this CBDC has finally been signed into law by President Vladimir Putin. The country had begun accelerating research and development around CBDCs last year, after the country invaded Ukraine and the ensuing conflict between the two countries. At the time, several nations had imposed sanctions on Russian funds and assets stored in other countries, prompting the country to look for a way to sidestep the financial restrictions.

Signed into law by President Putin, the Digital Ruble Bill (via Cointelegraph) names the Bank of Russia as the source operator for the digital ruble CBDC. The law will be effective from August 1, as per the government document.

CBDCs — or central bank digital currencies — function like cryptocurrencies, but they are regularised and issued by the central banks. Not only does this smoothen the online payment systems, but also reduces the dependency on cash notes. The Central Bank of Russia had begun testing the digital ruble CBDC with real clients and with the use of smart contracts last year.

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Once the digital ruble sees a wider roll out, Russian citizens will be able to process payments as well as instant money transfers via their digital wallets. Use of the CBDC will not be compulsory, and the government expects the currency to become more popular by 2027.

The bill that proposed the legalisation of Russia's CBDC was first passed by both of the country's parliament—the State Duma and the Federation Council, earlier this month.

A number of Russian banks were onboarded for the pilot trials of the CBDC last year, after feedback on its use cases were gathered from other participants of the financial market there.

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The country may be looking to use its CBDC to facilitate the movement of funds internationally despite sanctions against Russia imposed by Europe and the US.

India, China, Japan, Hong Kong, Zimbabwe, and Australia are other nations that are working on introducing their respective CBDCs into their existing financial systems.

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Further reading: Cryptocurrency, Russia, CBDC, Digital Ruble

Radhika Parashar

Email Radhika

Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More