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The digital ruble: It's finally here!
The Bank of Russia's CBDC is officially Russia's third form of currency
The wait is over! The Bank of Russia’s centralized, programmable digital token officially received the State Duma’s blessing on Tuesday.
Safe and convenient concepts such as “digital ruble platform”, “digital ruble platform participant”, as well as “digital ruble platform user” and “digital account (wallet)”, now have concrete definitions provided by pages and pages of legal mumbo-jumbo.
The approved legislation designates the Bank of Russia as the sole operator of the digital ruble platform. The Central Bank will be responsible for all aspects of “Russia’s” CBDC, including functionality, safety, and “the correct accounting” of transactions.
Interfax provided some more details about what was included in the final version of the bill:
The adopted law clarifies the ban on crediting digital ruble accounts, as well as on the accrual of interest on the balance of digital rubles. It is also prohibited to open joint digital ruble accounts (for several users).
The document also establishes the Central Bank’s right to block a platform participant (bank) from conducting a transaction if the regulator suspects it is being carried out without the client’s consent. In this case, the Central Bank will inform the bank or the client about the possibility of sending a second order using the same details and for the same amount. Upon receipt of a repeated order, the Central Bank will be obliged to honor it.
In addition, according to the law, the Bank of Russia will be able to enter into agreements with other CBDC operators [i.e., other central banks]—not only of a foreign state, but also of a group of foreign states.
By the way: Interfax’s report also featured an interesting comment from first deputy chairman of the Bank of Russia, Olga Skorobogatova, who is very excited about the possibility of creating not just “national” CBDCs, but CBDCs for “a whole space”. And just think: some gullible worrywarts claim CBDCs could undermine what little remains of national sovereignty.
The main provisions of the law will come into force on August 1, 2023.
The legislation also paves the way for a multi-phase project designed to integrate the digital ruble into Russia’s economy.
As stated in the materials on the digital ruble on the website of the Bank of Russia, the Central Bank will introduce [the CBDC] in stages: “First, we need to conduct a pilot on real digital rubles with real clients, and work out basic operations with banks (opening and closing digital wallets, transferring digital rubles between citizens, payment for purchases and services using a QR code). In the future, the range of operations will be expanded. [...] The decision to scale the digital ruble will be made based on the results of passing all stages of the pilot and taking into account the feedback from its participants.”
A VTB representative told RBC that the testing will take place in “friends and Family” mode—using a small circle of customers and bank employees. Banks will test all the main operations: registering and opening a wallet, replenishing it, withdrawing funds from a digital wallet to a non-cash account, transfers from one client to another, as well as payments and self-executing transactions, according to Alexei Matveev, head of the payment business development department at Alfa Bank.
I won’t waste your time explaining why the digital ruble is no different from the digital euro, or the digital peso, or whatever kind of soul-crushing digital token your own government is currently shilling.
Yes, there have been valiant attempts by the internet’s most revered intellects to portray the digital ruble as a sanctions-busting, sovereignty-protecting, completely voluntary, extremely friendly and benign digital coin.
But unfortunately these Very Serious Pundits are very seriously misinformed.
A closing thought before I leave you (don’t worry I will be back soon, maybe even tomorrow).
Guys, this was huge big news—the digital ruble is now official. It now has a formal legal status. It’s happened. It’s here and it’s probably not going away. For better or worse (probably for worse, but you never know!), the ratification of this law was a historic event.
And where’s the coverage? THIS HAPPENED YESTERDAY
I checked RT.com, the #1 source for Russia News. Nothing. (Or maybe I just didn’t see it? Or maybe they are seconds away from filing a report about this momentous event, which occurred almost 24 hours ago?)
Come on, now. Is Edward Slavsquat really the only English-language internet destination that thinks Russia’s adoption of a Central Bank Digital Currency is newsworthy? People seem to be interested in Russia. There is also much interest in CBDCs. But for some reason, when you put these two things together—crickets.
The reason this blog post is late is because I wasn’t staring at a screen yesterday—I was in a dainty Czech town, eating svíčková and drinking charming Czech beverages.
It occurred to me this morning, as I was piecing together what I did yesterday, that this means the only way you are going learn about what is actually happening inside Russia is to pray that a Hobbit in Polička doesn’t drink too much, and remembers to occasionally check his Russian news feed and maybe type something.
Uneasy lies the head that wears a crown, but I will do my very best.
Okay have a great day,
Edward Slavsquat appreciates your support