The Central Bank of Russia (CBR) is rolling out a “digital ruble” as Russia gets ready to join the cryptocurrency revolution, but in a way that the regulator remains in control of the e-currency.
The CBR has issued a series of guidelines on the digital currency "The Digital Ruble: what it is and how to use it", that was analysed by the business portal RBC.
As followed by bne IntelliNews, cut off from the international payments system following the imposition of the SWIFT sanctions shortly after the start of the war a year ago, Russia has accelerated its plans for digital currencies, which operate outside the control of international regulators.
Cut off from the regular international banking system, Russians looking for ways to send money out of the country to relatives living abroad have taken to using cryptocurrencies which are not covered by the banking sanctions, although the US has begun to target some of the largest exchanges with bans and threats of secondary sanctions for dealing with Russia.
However, the CBR has remained wary of cryptocoins and warned that they are speculative instruments and highly volatile. Acknowledging the use of e-currencies, the CBR has moved to set up a cryptocurrency that can be more easily used in online transactions, but unlike the likes of bitcoin, the digital ruble will remain under the control of the regulator that will control the e-monetary supply and guarantee conversion from digital to actual rubles, thus creating a coin that will have a stable value.
In general the state is also interested in a digital currency that can operate outside the international banking system, as it gives Russian an alternative way to settle international trade deals that can avoid international financial sanctions that have blocked Russia's ability to trade in dollars.
The digital ruble is the third form of national currency, along with cash and non-cash money. It will be issued by the CBR and stored in its own digital wallets of citizens and companies.
At the same time, the head of the CBR, Elvira Nabiullina, told the State Duma that the regulator is close to piloting the digital ruble project. "We are ready to start piloting the digital ruble, i.e. already conducting real transactions with real money, but it is now small amounts and a small number of clients. After the pilot, we will be able to offer the digital ruble to everyone," TASS quoted Nabiullina as saying.
According to Nabiullina, the digital ruble is the third form of money and people will decide for themselves which form of Russian money they will use.
"It will be up to each person to decide whether to use it or not. What will be useful to people is free transfers. But there is no interest charged on it. That is, non-cash will always be needed anyway – it's money in our accounts, interest is accrued on it," she commented.
According to the guidelines, both private and legal entities will only be able to have only one digital wallet. This digital wallet will not be linked to any commercial bank. But it will be possible to open and use it through any mobile application of the bank or personal account of the online bank of which the user is a client.
It will be possible to transfer digital rubles using the recipient's phone number and to pay for purchases using QR codes. To put digital rubles into a wallet or withdraw them, they will first need to be converted into the usual non-cash form of rubles, that is, through a customary bank account.
The CBR also rejected popular digital ruble urban legends in the guidelines. The regulator reassures that the introduction of the digital ruble will not lead to the abolition of cash and the compulsory use of only the new form of currency, while salaries of state employees and pensions will not be mandatorily converted to digital ruble.
The CBR also assured that there will be no "expiration date" for digital rubles. "They cannot burn out, just like the non-cash rubles in bank accounts. They are not bonus points, but a form of national currency," the CBR said in an explanatory note.