In early 2022, probably in January, Russia will have a first prototype of its digital rouble on a dedicated platform. However, it will take about a year of indexed testing to see if the final decision will be to launch it.
Russia is ready for the digital rouble
This was announced by Elvira Nabiullina, Governor of the Central Bank of Russia, during her speech at the Bofit (Bank of Finland Institute for Emerging Economies) conference.
If the digital rouble were to be accepted, it would be “compulsorily” redeemable at every point of sale in the country.
Inflation in Russia
Russia is also currently struggling with rising inflation.
The Central Bank has published the latest inflation figures, which currently stand at 7.9%. Putin’s government is optimistic, with forecasts of a return to the more manageable 4% line next year. Expert analysts point out that the digital rouble should not affect the current inflation situation.
Characteristics of the digital rouble
After the 12-month testing period, the digital version of the national currency can be announced following certain regulatory steps.
One of the first criteria to be met is certainly that of equating the digital rouble with a possible conversion into the other two fiat currencies currently used in Russia.
Nabiullina stressed in a recent statement that all steps taken to introduce the virtual rouble will have to comply with a series of financial rules. In addition, the general focus will have to be on a limited increase, if any, in the country’s current inflation.
The governor of the Central Bank of Russia added that this new financial introduction should be publicly available and, above all, linked to new technologies. Lowering the cost of transactions could be an important first step.
After the very serious economic consequences of the pandemic, Russia has been trying for some time to deal with the collapse in hydrocarbon prices (a quarter of the country’s GDP) and the expected failure to return to exports.
For some time now, the rouble has been going through a continuous and fluctuating phase of depreciation, especially against the euro.
The Central Bank of Russia has tried, through a manoeuvre, to block the flight of capital abroad, but it has been of little use, and inflation has again reached significant levels. Then there are all the returns linked to the serious Ukrainian crisis.
The rouble therefore seems to want to pursue relatively long-lasting stability, even by lowering rates on ordinary transactions.