The Bank of Russia said that the CBDC will make it easier to “track, control and transfer” information to fiscal authorities.
Russian President Vladimir Putin has signed a bill enabling the circulation of a digital ruble, i.e. a central bank digital currency (CBDC). The bill ascribes the nation’s central bank, the Bank of Russia, as the legal operator for the currency.
The Bank of Russia has been working on the digital ruble since 2020, before the Ukraine war. It began piloting the system in February 2022, and the bill passed its third and final hearing on July 11, 2023.
A CBDC is a digital form of a nation’s fiat currency. They have been increasingly implemented over the past year, with China now paying some government workers in a CBDC known as e-CNY (a representation of the yuan). Unlike Bitcoin, Ethereum or any other cryptocurrency, CBDCs are issued and controlled by a centralised government body or bank.
It’s thought that the ruble CBDC will help Russia circumvent Western sanctions brought on by the Ukraine war. The bank’s press office told Izvestia, a Moscow-based newspaper, that the digital ruble will reduce Russian dependence on the dollar, “reducing exposure to sanctions from third countries” as a result.
Though the paper doesn’t outline exactly how this will happen, a CBDC will make electronic cross-boarder payments cheaper, easier and quicker.
Another key ‘benefit’ of the ruble CBDC outlined by the BoR is surveillance and control.
“The amount of electronic payments is easier to track, control, transfer information to fiscal authorities and charge tax in accordance with the law,” the article outlined, making it easier to identify “corrupt officials and criminals”.
Related: “Big Brother’s Digital Dollar”: What are CBDCs and why has Florida banned them?
The press office added that the CBDC can prevent the potential destabilisation of the economy and stifle the “growth of social tension”, since transactions can be more tightly “controlled”.
Using the CBDC is optional, Russia’s central bank governor Elvira Naibullina said, stating “If they want, they use it. If they don’t want to, they don’t use it. But we really hope that it will be more convenient, cheaper for both people and business, and they will start using it. This is a new opportunity.”
Tests for the ruble CBDC will begin on August 1.
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