The Digital Ruble Pause In An Analog World
Even in the digital space, patience is a virtue
By Paul Goncharoff
The more things change, the more they comfortably stay the same. This applies even for the lightning-fast digital in our pedestrian analog world.
As it turns out the Russian State Duma will not be able to pass the required bills on the Digital Ruble by April 1, 2023, as originally intended.
This was confirmed last week by the head of the Committee on Financial Markets Aksakov. He noted that already in the first reading, a lot of comments on the drafts were voiced by the approving institutions. He said, (according to TASS) that “In early April, we’ll probably just look at all the amendments. In mid-April or early May, there could be adoption.”
Earlier, the Central Bank of Russia said that they were ready to start testing the Digital Ruble by April 1, but they would not do so without adopting the necessary legislative framework. A total of 13 key banks, including Sber, are planning to participate in the testing. As part of the pilot project, banks will test opening and closing a wallet for the Digital Ruble, managing balances, money transfers, and other basic online functions.
Two key bills are under final review, one introduces amendments to federal legislation allowing only the Central Bank of Russia (CBR) to issue the Digital Ruble. Russians will be able to open accounts through regular banks, but the actual management will remain with the centralized CBR regulator. The second amends the Civil Code equating the CBR Digital Ruble to non-cash money, as well as setting forth the legalities of opening an account for the digital version of the ruble.
In short, the CBR and the security services see only positive benefits happening from a non-cash ruble. According to authorities, the Digital Ruble may reduce obvious forms of cash corruption and probably due to the blockchain protecting against loss of funds. It is also seen by many as a vital stepping-stone in the new BRICS+,SCO, ASEAN and EAEU world of trading in respective national currencies, which would be supported by a digital version of the Ruble for international settlements.
On the other hand, the issues arising as with all other CBDCs worldwide are a concern for protecting financial privacy. How this will be satisfactorily addressed, and not just in Russia remains an ongoing question.
All that being said, the Russian Digital Ruble is moving on the home stretch, and barring any unforeseen event should be ready for use by the third quarter of this year.
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