 | Get all the essential market news and expert opinions in one place with our daily newsletter. Receive a comprehensive recap of the day's top stories directly to your inbox. Sign up here! |
(Kitco News) - Russia’s lower parliamentary house, the State Duma, passed the digital ruble bill in its third reading on Tuesday, bringing the central bank digital currency (CBDC) one step closer to being introduced to the public.
According to a report from Vedomosti, the new law establishes the legal norms for the introduction of a digital ruble in Russia, making it the third form of the national currency available for use in the country’s financial system. The Bank of Russia (BoR) plans to issue a digital ruble in addition to the existing cash and non-cash funds.
From here, the legislation will move to the assembly’s upper chamber, the Federation Council, and, if passed, to the president’s desk.
According to a statement from the Bank of Russia, the law introduces the basic concepts needed to integrate the digital ruble into the country’s financial system, “including defining the legal status of the digital ruble and transactions with it, [and] the relationship between the operator of the digital ruble platform - the Bank of Russia, its participants (financial intermediaries) and users (citizens and companies).”
The Board of Directors of the BoR is now tasked with creating and approving rules regarding operations on the digital ruble platform, and they will also determine the tariffs for operations with the CBDC and the timeframe in which banks must provide customers with the opportunity to conduct such operations.
The current plan is for transfers and payments in digital rubles to be free for Russian citizens, while the tariffs for businesses accepting payments in digital rubles will be 0.3% of the payment.
The BoR will be responsible for opening digital wallets, conducting operations with digital rubles, and a number of other regulatory functions.
The central bank said the digital ruble was always intended to serve primarily as an additional means of payments and transfers, and the law stipulates that it will not be possible to open a savings account or receive a loan in digital rubles, and no interest will be accrued on balances in digital wallets. “This will contribute to the development of competition and innovation in the financial market,” they said.
The law also “lays the foundation for the development of the digital ruble platform, including in the field of cross-border interaction,” the Bank of Russia added. Once signed by the president, the main provisions of the law will come into force on August 1.
The digital ruble bill was first introduced to the State Duma in December and passed its first reading in March. A pilot project for the CBDC was originally scheduled to launch that month, but those plans were postponed until after a comprehensive regulatory framework for the digital ruble was adopted.
Now that the bill has been approved by the State Duma and is on track to be signed by Russian President Vladimir Putin, the BoR is expected to announce the start date of the pilot trial in the near future.
On Thursday, Olga Skorobogatov, first deputy chair of the BoR, said the pilot program would be opened to a limited number of users in 2023 and 2024 and expects the digital ruble to be rolled out to all Russian citizens between 2025 and 2027.
|
| Russian citizens hold more crypto than gold or mutual funds - survey |
While the digital ruble is expected to bring a variety of benefits, including greater efficiency and faster payments, some have warned that the CBDC also carries risks, especially for the country’s private banking system.
Russian government-owned Gazprombank warned in February that the digital ruble rollout could cause losses for Russia’s commercial banks, and recommended the CBDC be introduced slowly and in stages to give the financial system time to adapt.
A report released by the Russian branch of McKinsey estimates that traditional banks face potential losses of up to 250 billion rubles ($3.5 billion) over the next five years if a digital ruble is introduced, while retailers will see an estimated profit of $1.1 billion annually.
At the same time, the country is also looking to stop the widespread adoption and use of cryptocurrencies in Russia, and the digital ruble is seen as a way to provide a faster payment option for citizens that remains under government control.
Russia is also in talks with Iran to launch a gold-backed stablecoin that could be used for cross-border settlements, and the country will be a key player in the creation of a new BRICS trading currency that would also be backed by gold. Many expect the official announcement for this currency to come during the BRICS summit in August in South Africa.
