Russia Could Consider Using the Digital Ruble as Reserve Currency to Boost Economy

Western nations are concerned that Russia may use its CBDC to circumvent imposed sanctions.

By Shomik Sen Bhattacharjee | Updated: 23 March 2022 17:22 IST

Russia Could Consider Using the Digital Ruble as Reserve Currency to Boost Economy

Photo Credit: Pixabay / Sergey Gorbachev

Russia's central bank has been aggressively pursuing the 'Digital Ruble' initiative

Highlights

Russia may try to regain access to global banking through CBDC use
Russia's central bank began trials of the Digital Ruble recently
Russia is yet to pass crypto regulatory laws

Russia's lower house of parliament, State Duma, has approved a resolution calling for the Digital Ruble — an additional form of the Russian national currency that will be issued digitally by the Bank of Russia — to be designated as a reserve currency. Sergei Mironov, the leader of the opposition party called 'A Just Russia' in the Duma, has also urged the federal government, the central bank, and the operational headquarters to introduce the Digital Ruble in a bid to counter Western sanctions amid the ongoing Ukraine crisis.

As per a Forklog report, cited by Bitcoin.com, Mironov said that the goal of introducing the Digital Ruble is to issue a Central Bank Digital Currency (CBDC) for specific purposes like financing of housing and other construction projects, as well as the development of production and transportation infrastructure.

“The Digital Ruble should become a full-fledged investment and reserve currency for Russia," Mironov added. The parliamentarian believes the introduction of the CBDC will provide the Russian economy with needed funding without adding to inflation clarifying that Digital Rubles cannot be deposited abroad or used for non-intended purposes, he added.

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Statements by Alexander Yakubovsky, another lawmaker and member of Russia's Crypto Regulatory Working Group, recently indicated that the country is evaluating the use of digital currencies to restore its access to global finance.

On the other hand, a host of governments who have imposed economic sanctions on Russia believe that the new iteration of the Russian fiat may be used to circumvent sanctions.

It is also worth noting that the Russian Central Bank (CBR), has been staunch in its anti-cryptocurrency legalisation stance and has been aggressively pursuing the Digital Ruble initiative. The monetary authority began considering establishing a CBDC back in early 2020 and published a consultation document later that year before unveiling a Digital Ruble concept in April 2021, defining its primary architecture.

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The CBR announced the first complete transactions between individual wallets in mid-February, kicking off testing of the Digital Ruble platform. A handful of Russian banks have been picked to take part in the pilot phase, which is slated to last until 2022. Bank of Russia officials maintain that their digital money will open new doors for Russian citizens, enterprises, and the State.

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