The digital ruble will be a new form of money issued by the Central Bank of Russia and backed by the national currency.
Russian President Vladimir Putin recently signed a bill into law that would make the country's central bank digital currency (CBDC), the digital ruble, legal tender and allow for the integration of this currency into the Russian financial system. According to the bill, The digital ruble will have the same functions as cash and can be used to make payments, transfers and other financial transactions in the country.
The bill also authorizes the Central Bank of Russia, the entity in charge of the nation's monetary policy, to Launching pilot tests with the digital ruble as of August 1.
By approving the bill in question, Russia will also establish the conditions for the creation and launch of an electronic platform which will be operated by the central bank and will allow access to the digital ruble.
Russia is one of many countries developing a CBDC digital currency to streamline its financial system, revolutionize the way payments are made, and ensure innovation, interoperability, and the presence of its currency in the new era of digital finance. In addition to all this, the digital ruble will also make it easier for Russia to access the international market and evade economic sanctions imposed by the United States.
The Central Bank of Russia will regulate the digital ruble
The Central Bank of Russia is the entity designated for the issuance, supervision and regulation of the digital ruble. According to the 4 pages document Signed by the Russian President, the Central Bank of Russia is the only entity authorized to issue and manage the ruble CBDC and provide users with digital wallets to store and transfer this new form of money.
The Central Bank of Russia will also be responsible for determining the technical and security requirements that the CBDC platform must meet, as well as the limits and fees applicable to the use of the digital ruble.
Under the bill, the Bank of Russia will also have the right to process users’ personal data. The latter, according to Ledger Insights, is one of the biggest concerns about the digital ruble and any other CBDCs developed around the world, as they could become surveillance tools for governments to monitor the operations and financial movements of their citizens.
The bill also appears to grant special powers to the Central Bank to limit access to the digital ruble to certain individuals and institutions, as well as to prohibit certain transactions with the CBDC, if it is considered that these may undermine financial stability, national security or consumer protection.
The digital ruble is Russia's third form of money
The digital ruble will become the third form of money in Russia, according to the country's president, and will have the same value as the traditional ruble. This new form of digital money can be used for both online and offline transactions.
The draft law on the digital ruble also mentions that the CBDC can be inherited in the event of death. This means that people can bequeath the rights to access and use a digital ruble account through a will.
Although pilot testing of the digital ruble will begin next month, the launch of Russia's CBDC digital currency is not expected until 2024.
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