Key Takeaways
- The enactment grants legal authority to the Bank of Russia to issue its own CBDC.
- The newly signed bill designates the Bank of Russia as the platform operator for the digital ruble, allowing it to manage and oversee digital ruble accounts.
In a significant move towards modernizing its financial landscape, Russian President Vladimir Putin has signed the digital ruble bill into law. The enactment grants legal authority to the country’s central bank, the Bank of Russia, to issue its own central bank digital currency (CBDC). This milestone comes after a multi-year effort, with the digital ruble project first introduced by the Bank of Russia in 2020.
The newly signed bill designates the Bank of Russia as the platform operator for the digital ruble, allowing it to manage and oversee digital ruble accounts. It also establishes legal definitions for users and outlines the operational framework for banks under the CBDC system. The bill’s journey through the legislative process culminated with its third and final hearing on July 11, awaiting the President’s signature to be formalized into law.
The idea of a digital ruble has been circulating within Russia for years, but the urgency to develop and implement it intensified following the imposition of extensive sanctions by the United States and its allies. These sanctions aimed to isolate Russia from international financial markets after the country’s invasion of Ukraine. As a result, the Russian government saw the need to accelerate efforts to bring the CBDC project to fruition, seeking financial independence from international restrictions.
The Bank of Russia began its work on the digital ruble project in 2020, publishing its first analytical report on the concept. Subsequently, the regulator updated the report to include feedback from Russian banks and other financial market participants. The project advanced further in February 2022 when the central bank initiated pilot tests with several Russian banks, demonstrating the government’s commitment to exploring the potential of a digital currency.
The new law aims to provide convenience and cost-effectiveness for both individuals and businesses, promoting widespread adoption of the digital ruble. However, Governor Elvira Nabiullina emphasized that its use would remain voluntary, assuring that no one would be compelled to adopt the CBDC. Instead, the authorities hope that the digital ruble will present an attractive option for conducting financial transactions, offering newfound opportunities for the nation’s economic ecosystem.
Having passed both houses of Russia’s parliament, the State Duma and the Federation Council, the bill cleared the path for the President’s endorsement. Following Putin’s signature, the Bank of Russia is now poised to commence tests of the digital ruble starting from August 1.
