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Russian President Vladimir Putin has signed into law a bill that will grant legal tender to a “digital ruble” amid severe Western sanctions and rising inflation brought on by the war in Ukraine.
Under the bill, Putin has granted legal authority to the Bank of Russia—the country's central bank—to serve as the platform operator for the central bank digital currency (CBDC). The bill also provides legal definitions for users and specifies how banks will operate under the new framework.
Although the bill now has Putin’s green light, Russian officials have said they do not expect the digital ruble to be widely adopted for years. In an interview with Forbes, Olga Skorobogatova, the deputy chair of the central bank, said most citizens will only begin receiving access to online wallets by 2025 at the earliest.
Unlike a cryptocurrency like Bitcoin, a CBDC is a centralized token with a value tied to a national fiat currency. Today, Russia's ruble is considered to be among the world's worst-performing currencies because of rising inflation, which has been accelerated by the West's sanctions after Moscow launched a war against Ukraine last Feburary.
The Russian ruble is currently trading at 90.6 rubles to the USD, and at 100 rubles to the Euro. Inflation pushed the central bank to raise its interest rate last week to 8.50%.
The idea of a digital ruble has floated around for years in Russia, but the concept drew more urgency after the United States and its allies launched a barrage of sanctions to cut Russia off from international financial markets after the invasion. Legislative moves to bring the CBDC online accelerated earlier this year.
Over the last two weeks, both houses of Russia's parliament—the State Duma and the Federation Council—passed the bill, and sent it along for Putin's signature. With it, the central bank can begin starting tests of the CBDC as of August 1.
Under the bill, Russians will be able to make payments and transfers from their digital wallets, which would be within the central bank's platform or that of one of its partner banks. On the other hand, the CBDC can only be used for payments or transfers, not loans or deposits, according to the central bank.
Two days after the Federation Council passed the bill, Russia’s central bank governor Elvira Naibullina said Russians would not be forced to adopt the digital ruble, but expressed hope that more people would consider doing so.
"If they want, they use it. If they don't want to, they don’t use it," Nabiullina said, according to Russian state-owned media. "But we really hope that it will be more convenient, cheaper for both people and business, and they will start using it. This is a new opportunity."