On October 13, 2020 Russia’s central bank published a consultation paper on the ‘digital Ruble’ officially stating its objective to issue a CBDC (Central Bank Digital Currency). Soon after, the first pilots are now slated for a launch in the first half of 2021. In a statement to the media, Anatoly Aksakov, a member of the Russian State Duma and a key representative of Russia’s crypto-related legislation efforts, says that Russia is now fully ready to adopt the digital currency, both in terms of technological and legal aspects.
CBDC is one of the buzzwords that has been doing rounds for a while now. Multiple central banks from around the world have been evaluating the merits of digital currency as the People’s Bank of China has already made a move to launch digital yuan.
Now a number of Russian financial organizations have volunteered to try out the country’s soon-to-be-launched CBDC. As per this report published by local news agency Izvestia from October 16, 2020 at least five Russian banks are enthusiastic about taking part in Russia’s non-public digital ruble pilots: the banks being Crimea’s Russian National Commercial Bank, the state-backed Promsvyazbank, the Credit Bank of Moscow, the commercial bank Zenit, and the mortgage bank Dom.RF. Reportedly, Crimea’s Russian National Commercial Bank has also expressed interest in being operatively involved with the first pilots so as to provide Crimea with the “most innovative banking technologies.”
The digital ruble will function as an additional form of money
In last week’s report, Russia’s central bank has proposed that the digital ruble will function as an additional form of money alongside the more usual forms: like cash and bank accounts. The report also stated that unlike other cryptocurrencies/stablecoins, the digital ruble’s viability will be warranted by the Russian Government- and the Bank of Russia in particular.
The report also talks in length about the privacy of the users. While the process of using digital ruble won’t be entirely anonymous- as is the case with most cryptocurrencies- the report does state that “data about transactions with the digital ruble will contain more limited information than the existing payment systems”.
The banks will record information on the participants in a transaction, but not the purpose of the transaction. Digital ruble users will have to go through KYC (know-your-customer) procedures on the Bank of Russia’s platform. The amount of digital rubles that can be withdrawn at once will be limited too, just like the limits on cash withdrawals.
As per the report, for now the central bank is contemplating using the digital ruble to distribute salaries and benefits post the public adoption of the currency. Users will be able to store and transfer the digital ruble through an “analog of a bank card”; however, it seems like merchants will have to “reconfigure payment terminals” to accept the digital money.