The State Duma, the second body of the Russian Parliament, has recommended that the digital ruble be recognized as a reserve currency. However, fears have been raised in the West that the new iteration of Russian fiat could be used to circumvent the country’s isolation due to sanctions.
Worried about increasing Western sanctions, Russian officials have considered ways to circumvent limits that have already reduced Russia’s accessibility to its foreign exchange reserves and the global financial system.
According to Russian journalists and Forklog, Sergei Mironov, the head of the opposition group “A Just Russia” in the Duma, encouraged the federal government, the central bank and the operational center for the fight against sanctions to implement the ruble digital.
The purpose of the proposal, according to the senior Party member, is to create the Central Bank Digital Currency ( CBDC ) for specific purposes such as housing and some other construction projects, as well as utility facilities. manufacturing and transportation infrastructure.
Sergei Mironov said the digital ruble should become Russia’s reserve currency. The legislator believes that the CBDC will provide much-needed funds to Russian industry without increasing inflation. He also said that digital rubles cannot be transferred abroad or used for unintended reasons.
Western nations fear that Russia is using cryptocurrencies, such as the digital rouble, to dodge sanctions imposed following its invasion of Ukraine, and have taken steps to plug the loopholes. Another politician, Alexander Yakubovsky, a member of the Legislative Cryptography Task Force, recently said that Russia is enthusiastic about using digital currencies to regain access to global finance.
The Central Bank of Russia ( CBR ), a strong supporter of the legalization of cryptocurrencies, is working on the digital ruble project. Three years ago, the Department of Finance began considering a CBDC. In October 2020, the bank presented a consultation document, and in April 2021, it presented a digital ruble proposal defining its main architecture.
The CBR announced the first full transactions between individual wallets in mid-February, launching the tests of the digital ruble platform. A few Russian banks will participate in the trials, which will continue until 2022. The Bank of Russia says its digital currency will provide new opportunities for Russian citizens, businesses and government agencies.
The Russian Federation has also tried to reduce its dependence on the dollar. Last October, the Russian Foreign Ministry warned that alternative currencies and even digital assets could eventually partially replace the dollar in Russia’s currency reserves and trade transactions.