Digital Ruble Could Be Tool Against Sanctions, Bank of Russia Says

The Bank of Russia (BoR) has said a role in side-stepping economic sanctions would be one reason to launch a ruble-backed central bank digital currency (CBDC).

  • Talking to Moscow-based newspaper Izvestia, the institution’s press office said a digital ruble could help diminish the dependence of the Russian economy on the U.S. dollar.
  • This, in turn, could help mitigate the risk of the foreign sanctions, which have been imposed on Russia by the U.S. and the European Union in recent years.
  • The most recent round of EU sanctions was imposed last week on several high-level public officials in Russia over the alleged assassination attempt on Russian opposition leader Alexei Navalny with a chemical warfare agent.
  • The digital ruble could also make electronic payments cheaper, ease the pressure on the existing payment infrastructure and make cross-border payments more convenient, the BoR said.
  • The bank did not go into details over how exactly a digital ruble would help counter sanctions.
  • U.S. sanctions can also include bans on operations with digital currencies, as was the case with the three Russian nationals charged with interference in the U.S. elections this autumn.
  • The central bank did say it would not permit any use of the CBDC not controlled by the regulator, and that the token must be backed by actual rubles.
  • On Oct. 13, the BoR published a report on a possible future launch of the digital ruble seeking public feedback by Dec. 31.
  • A ruble-backed stablecoin guaranteed and controlled by the government could stimulate financial innovation and even help prevent corruption, the report said.
  • After the consultation period, the regulator may run pilot of the digital ruble with a limited set of users.
  • A final decision on whether to go ahead with the digital currency would only be made after that, the report indicated.
  • This summer, Russia passed a law regulating the issuance of digital securities in the country, which also mentions cryptocurrencies.
  • A more detailed set of rules for cryptocurrency is yet to be passed and, according to a draft bill recently published, they may be prohibitive.
  • The Bank of Russia has consistently voiced an anti-crypto stance over the years, with its head, Elvira Nabiullina, saying decentralized cryptocurrencies like bitcoin should not be legal in the nation.