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

Russia's central bank says a digital ruble could make Russia less dependent on the U.S. dollar and more resistant to foreign sanctions.

Oct 19, 2020 at 12:07 p.m. UTC
Updated Sep 14, 2021 at 10:11 a.m. UTC

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.

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.