Following in China’s footsteps, Russia’s Central Bank has been developing the digital rouble for a few years now.
Digital rouble, what is a CBDC?
CBDCs, or Central Bank Digital Currencies, are digital currencies that are linked to the performance of the fiat currency.
As with the tried and tested Chinese digital yuan, we may soon have a Russian counterpart.
These digital tokens, similar to cryptocurrencies, are issued by the Central Bank of the country that issues and regulates them.
These currencies allow for greater financial inclusion, facilitate monetary policies and unlike cryptocurrencies can provide a means to verify and make public the identity of the person making a transaction.
The ongoing project in Russia
The Russian Central Bank has been planning a ruble token for a few years now.
A real digital rouble token (CBDC) is being prepared by the CBR (Russian Central Bank). This instrument is already at an experimental stage and is awaiting the first massive tests to verify its reliability and functionality for private, corporate and institutional transactions.
Olga Skorobogatova, First Vice-President of the Bank of Russia, told the RBC business news portal:
“If we move quickly with testing and legislative changes, we can implement it over the next few years”.
The comment suggests that we are on a roll to accelerate the project.
Despite the fact that not all the banks called to be part of the project are ready to participate yet, the monetary authority has no intention of having any delays on the roadmap, it is getting serious and the banks will have to adapt quickly.
In a few years we will have the digital rouble.
Between January and February of this year, the Central Bank of Moscow has already carried out a number of tests, with its first transaction between virtual wallets in February.
The next step is to continue and intensify these tests throughout 2022.
This autumn, the CBR plans to test payments of goods and services with the nascent Kremlin Token as well as government transfers.
The traditional Russian fiat currency could thus offer three versions as early as 2023, a classic paper and coin version, an electronic version and the new digital version to complete an ever-evolving offer.
These digital currencies perfectly meet the needs of the Russian government and oligarchs, who are struggling with a massive financial embargo and sanctions imposed by NATO, the European Union and the United States of America.
A further step would be to turn the Token’s version of the Ruble into a kind of domestic reserve currency to combat dependence on US dollar transactions in the international arena.
This is not only because of the freezing of Russian treasuries scattered around the world that are temporarily frozen by the international financial community and states.
Despite the fact that the rouble has recovered and inflation is less severe in Russia than in the rest of the world, we can only wait for this new token which, like the digital yuan, the Swiss franc and the US dollar, will soon enter the realm of digital state currencies at a time when its country of origin is in great need of them in terms of financial freedom.