The Central Bank of Russia’s (CBR) eagerly anticipated digital ruble pilot is postponed until the end of July, awaiting approval from the State Duma.
The latest amendments to the legislation indicate a significant focus on enabling non-residents to access the digital ruble. At the same time, other legal changes raise questions about data encryption and enforcement actions.
As Russia navigates the complexities of its CBDC journey, countries worldwide are increasingly exploring their central bank digital currencies.
Cross-border initiatives amidst sanctions
The digital ruble pilot, originally scheduled to commence on April 1, has experienced delays due to legislative processes.
According to the Russian state news agency Interfax, the legal approval for the central bank digital currency (CBDC) is now anticipated by the end of July.
The updated legislation grants non-residents unrestricted access to digital ruble transactions, setting it apart from other central banks that initially restrict foreign usage. This inclusivity stems from Russia’s motivation to establish an alternative payment system in response to international sanctions imposed following the war in Ukraine.
As the digital ruble platform operator, the central bank possesses the authority to authorize both domestic and foreign banks to partake in CBDC transactions, sources say.
Non-residents can access the digital ruble via foreign banks, domestic banks, or directly through the central bank, provided that the law permits it. This approach offers flexibility and accommodates a range of participants, potentially paving the way for cross-border CBDC initiatives.
Reports in January hinted at the Central Bank of Russia’s experimentation with cross-border CBDC operations, exploring bilateral linkages and shared platforms.
While specific partnerships with Iran, India, and China remain unconfirmed, India’s announcement of cross-border CBDC collaboration with the UAE suggests a growing interest in such initiatives.
Notably, China and the UAE are involved in the MBridge shared CBDC platform. In addition to CBDC endeavors, Russia has drafted legislation to facilitate using digital assets, including tokenized precious metals, for cross-border payments.
The CBDC legislation contains an intriguing amendment related to data encryption, specifically safeguarding information about Federal Security Service personnel and individuals under security protection.
While such measures are expected to protect sensitive data, it raises questions about the encryption of ordinary payment data. It implies that the central bank may retain comprehensive payment records, potentially differing from some western CBDC designs aiming to prioritize privacy and avoid government surveillance.
Another legal amendment addresses enforcement actions related to claiming debts against digital ruble wallets. In Russia, like bank accounts, claims against digital ruble wallets can only be made above a certain threshold, potentially leaving individuals with minimal income.
Although the legislation lacks a subsistence limit, it will likely be revised in subsequent iterations to address this concern.
Global CBDC adoption
As Russia is experiencing delays in the legislative process, it’s important to note that the global CBDC landscape is witnessing a significant surge in the adoption, with more than 90% of central banks worldwide currently exploring or actively pursuing CBDC initiatives.
This means that as Russia continues its journey towards creating its digital ruble, it aligns itself with the broader global trend of CBDC adoption.
The delays in the Russian digital ruble pilot emphasize the need for careful navigation through the legislative process, ensuring a smooth and secure launch.
The enthusiasm for CBDCs remains strong internationally, with central banks across the globe recognizing the potential benefits and exploring the possibilities of introducing their digital currencies.