In a significant development for Russia’s central bank digital currency (CBDC) initiative, the digital ruble has moved closer to becoming a reality as the State Duma, the lower chamber of the Federal Assembly of the Russian Federation, passed the digital ruble bill in its third reading on July 11. The legislation has now progressed to the next stage of review in the Federation Council, the assembly’s upper chamber, before potentially reaching the desk of the country’s president.
The digital ruble bill, which underwent its last amendment at the end of June, establishes the legal definitions of key terms such as “platform,” “participants,” and “users,” while also providing general guidelines for the CBDC ecosystem.
Under the current framework, the Bank of Russia (BoR), Russia’s central bank, will assume the primary role as the operator of the digital ruble infrastructure and will bear the responsibility for safeguarding all stored assets associated with the CBDC.
The primary objective of the digital ruble, as stated by the BoR, is to function as a secure and efficient payment and transfer method. Consequently, users will not have the ability to open savings accounts with the digital ruble. The BoR emphasizes that individual customers will be able to conduct payments and transfers free of charge, while corporate clients will incur a fee equivalent to 0.3% of the payment amount.
Russian Central Bank Announces Digital Ruble Mass Rollout by 2027
In a significant move towards digitalization, the State Duma introduced a bill in December 2022 to pave the way for the adoption of a central bank digital currency (CBDC), known as the digital ruble. This bill successfully passed through its first reading in March 2023, marking a crucial step in Russia’s journey towards a digital future.
Addressing concerns raised by various stakeholders, including a subsidiary of Gazprombank, a prominent government-owned gas company, the risks associated with a rapid transition to digital money were brought into focus. The subsidiary cautioned against potential risks for banks amidst this digital transformation. According to a report by McKinsey, a leading consultancy firm, traditional banks in Russia could face potential losses of approximately 250 billion rubles ($3.5 billion) over the course of five years due to the implementation of the CBDC. On the other hand, the report also estimated that retailers could generate an annual profit of $1.1 billion.
To ensure a smooth and successful implementation, the Central Bank of Russia has announced a comprehensive roadmap. In a recent interview, Olga Skorobogatova, the deputy chairman of the central bank, disclosed plans for a pilot program to test the digital ruble. This pilot program, scheduled to run from 2023 to 2024, aims to evaluate the effectiveness and reliability of the CBDC in real-world scenarios.
Building upon the outcomes of the pilot program, the central bank plans to roll out the digital ruble to all Russian citizens by 2027. This mass rollout is expected to revolutionize the country’s financial landscape, offering enhanced convenience, efficiency, and security in day-to-day transactions.