In an advanced report issued by the Bank of Russia, the market regulators confirmed that the testing for the central bank digital currency (CBDC), commonly known as the digital ruble, might start soon. On July 18, the regulators presented the bill before the Federation Council, the highest legislative unit in Russia, for review.
In the review process, the members of the Russia Federation Council green-lighted the bill. The bill outlined the fundamental law for supervising the implementation of CBDC in Russia.
On July 11, the bill was submitted to the State Duma for regulatory scrutiny. After passing the review process, officials at the State Duma adopted the bill.
Russian Regulators Approves CBDC Bill
From the legislative approval of the draft law, the financial regulators plan to submit the bill to Russian President Vladimir Putin for final consent. However, if President Putin enforces the bill, the Bank of Russia will be granted the authority to conduct pilot tests for the digital ruble. Soon after the president signs the bill, the financial watchdog will commence the CBDC pilot test in early August.
Earlier, the Bank of Russia had announced that the CBDC would be used in payment and transfer. The apex bank will impose a restrictive measures to bar the use of digital rubles in lending and depository services.
However, the Russians will be allowed to use their digital wallet in payment for services and transfers. The wallet will be built on the Bank of Russia ecosystem to ease the supervision of CBDC. Also, one of the strategic partners of the Russian central bank will have partial control over the user’s digital wallet.
In an interview with Bloomberg, the Bank of Russia revealed plans to partner with 15 lending platforms to conduct digital ruble pilot tests. The bank stated that the CBDC trials will enable the users to create a digital wallet account on the Bank of Russia homepage. Afterward, the partners will support the bank to ensure the local bank can easily assess the Bank of Russia platform.
Russian Regulators Set to Commence CBDC Testing
Addressing the Bloomberg team, the Bank of Russia plans to work with best-performing payment and financial service providers Mastercard, Visa, Mir, and others in the CBDC pilot tests. In response to the public inquires, the bank told Bloomberg the CBDC will improve cross-border payment.
In subsequent report issued by the deputy chairman of the Federation Council, Nikolay Zhuravlev the excutive urged the regulators to consider developing payment and financial infrastructure that can operate independently. The official believes that if Russia adopts advanced financial tools, the country will perform well in foreign trade.
With the latest development in CBDC, Russia joins other countries to explore ways to implement digital currency. In the Asia region, Russia plans to follow the footstep of Japan and China, which have completed the pilot trials for CBDC.
On the contrary, the US CBDC project has been limited by the competing interests between President Joe Biden’s team and the Federal Reserve. In a recent debate, the Biden administration engaged in a legal exchanges with the Federal Reserve concerning the launching of the CBDC.
Even though the country’s national currency backs CBDC, digital fiat has been a center of speculation. Market critics argued that the CBDC exposes the public to privacy concerns since the authority is given the power the supervise digital currency transactions.
A statement issued by the head of the central bank, Elvira Nabiullina, CBDC, is considered the product of mass surveillance where user privacy is a threat. The executive confessed that the CBDC would provide different anonymity than cash transactions.
Even though the war against Ukraine has undermined the Russian economy, the country continues to make strategic moves to cope with emerging economies. The Ukraine war has resulted in the imposition of Western sanctions that have adversely affected the ruble’s value. Currently, the Russian ruble ranks among the worst-performing currency in the world.
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