Amidst the escalating trend of central bank digital currencies (CBDCs), Russia’s anticipated digital ruble project has leaped forward, moving closer to reality. On July 11, the State Duma, the lower chamber of the Federal Assembly of the Russian Federation, sanctioned the digital ruble bill during its third reading. The legislation now proceeds to the Federation Council, the assembly’s upper chamber, and, if endorsed, to the president’s desk.
New Legal Framework for Digital Currencies
The latest amendment to the bill occurred in late June, establishing legal delineations for key components such as “platform,” “participants,” and “users,” while also laying out broad guidelines for the budding CBDC ecosystem.
In this newly proposed structure, the Bank of Russia (BoR) would take on the role of the chief operator of the digital ruble infrastructure, assuming responsibility for all assets held in this digital form.
According to the Bank of Russia, the primary objective of the CBDC is to function as a payment and transfer medium. Consequently, users will not have the option to open savings accounts. The BoR underlines that payments and transfers would be cost-free for individual customers, while corporate clients would incur a nominal fee of 0.3% of the payment amount.
A Glimpse into the Digital Ruble Legislative Process
The State Duma first encountered the digital ruble bill in December 2022 and advanced through its initial reading in March 2023. In the intervening period, a subsidiary of Gazprombank, the prominent Russian government-owned gas company, expressed concerns about potential risks for banks if there were a swift shift to digital money.
A Russian arm of McKinsey report estimated that the CBDC implementation could result in losses approximating 250 billion rubles ($3.5 billion) for conventional banks over five years. Conversely, the consultancy firm projected a potential profit surge for retailers, amounting to $1.1 billion annually.
The Future of the Digital Ruble
In a recent discourse, Olga Skorobogatova, the central bank’s deputy chairman, projected the digital ruble’s widespread deployment for all Russian citizens by 2027. An experimental program to test the CBDC will run between 2023 and 2024.
In its various complexities, the digital ruble project signifies a bold step for Russia in the emerging realm of digital currencies. As the Bank of Russia takes on the mantle of the principal operator, this could be a game-changer for the national and global financial landscapes.
As the world waits to see how this ambitious project unfolds, it’s clear that the digital ruble could potentially alter the course of digital transactions, banking, and global finance.
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