Putin Approves Digital Ruble Law, Russia Launches CBDC

Russian President Vladimir Putin has given his official approval to a bill that paves the way for the introduction of a digital version of Russia's national currency—the digital ruble. The newly signed law grants legal authority to the Bank of Russia, the country's central bank, to operate as the platform provider for the digital ruble, as stated in an official document. Under this legislation, the Bank of Russia will oversee the management of digital ruble accounts and serve as the primary operator of the digital ruble infrastructure, holding responsibility for all stored assets. Testing of the central bank digital currency (CBDC) is scheduled to begin on August 1. Bank of Russia governor Elvira Nabiullina clarified that using the digital ruble will be voluntary for Russian citizens. The CBDC will not be mandatory, and individuals will have the freedom to choose whether or not to adopt it. Nabiullina expressed optimism that the digital ruble would offer convenience and cost-effectiveness to both individuals and businesses, presenting new opportunities in the financial landscape. The idea of a digital ruble has been under discussion in Russia for several years, but the urgency to launch it gained momentum due to the imposition of sanctions by the United States and its allies. These sanctions motivated swift action, leading to the bill's passage in both houses of Russia's parliament—the State Duma and the Federation Council. The Bank of Russia has been diligently working on the development of the digital ruble since 2020. It released an analytical report on the topic, incorporating feedback from Russian banks and other financial market participants. Pilot tests were conducted with several banks in February 2022. However, the outbreak of the war in Ukraine further underscored the need to implement the digital ruble as a strategic measure to mitigate the impact of Western sanctions. Apart from Russia, 21 other nations have launched pilot programs for central bank digital currencies, as per the Atlantic Council CBDC tracker. In total, 130 countries, representing 98% of global GDP, are currently exploring CBDCs, with 19 G20 countries in the advanced stage of their CBDC development. As of now, 11 countries have fully launched a CBDC, including China, The Bahamas, Nigeria, Anguilla, Jamaica, and seven Eastern Caribbean countries. Notably, the United States has no confirmed plans to launch a digital currency. However, the country has been advancing its efforts in developing a wholesale (bank-to-bank) CBDC. Following Russia's invasion of Ukraine and the G7 sanctions response, the progress on wholesale CBDC developments has doubled, with 12 cross-border wholesale CBDC projects currently underway. In conclusion, with the approval of the digital ruble law and the launch of Russia's CBDC pilot tests, the country takes a significant step forward in its digital currency initiatives, joining the global trend of exploring and implementing central bank digital currencies to shape the future of financial systems.