The lower house of parliament in Russia, the State Duma, saw a call issued for giving the status of reserve currency to the digital ruble. Meanwhile, there has been a rise in concerns in Western countries that the digital incarnation of the Russian currency may be used for evading sanctions that have been imposed to isolate the country. It is because of the increasing penalties from the West that the officials in Moscow have begun to explore ways for circumventing the sanctions that have limited the country’s access to the global financial market and its foreign reserves.
Heading the opposition ‘A Just Russia’ faction in the lower house, Sergei Mironovurged the central bank, the federal government and the operational headquarters to introduce the digital ruble in order to counter the sanctions. According to the high-ranking parliamentarian, their goal is to launch a central bank digital currency (CBDC), which could be used for specific purposes, such as financing construction projects as well as housing, along with the development of transportation and production infrastructure. Mironov stated that they should make the digital ruble a reserve currency and full-fledged investment for the country. As per the deputy, the CBDC would be able to provide the country’s economy with the necessary funding without pushing up inflation.
He added that it would not be possible to use the digital ruble for non-intended purposes and it would not be deposited abroad. Western allies are concerned that Russia might make use of cryptocurrencies, along with the digital ruble, to evade the sanctions that have been imposed due to its military invasion of Ukraine. Therefore, the countries have already taken steps for closing the loopholes that could be used for this purpose. Another lawmaker, Alexander Yakubovsky, also stated recently that Russia wants to use digital currencies for restoring its access to the global financial market.
He is also part of the crypto regulatory working group. The digital ruble project is under development by the Central Bank of Russia (CBR), which is strongly opposed to legalizing cryptocurrencies in the country. The regulatory authority had begun to consider the idea of issuing a CBDC about three years ago. Back in October 2020, the monetary authority published a consultation paper and a digital ruble concept was released in April 2021 that outlined the principal architecture. This year, the CBR began testing of the digital ruble platform and announced in mid-February that they had completed the first digital ruble transactions between individual wallets.
The trials are expected to happen throughout 2022 and a dozen Russian banks are going to participate. Bank of Russia has insisted that their CBDC would help in creating new opportunities for Russian businesses, citizens and the state. The Russian Federation has also been making efforts to reduce its dependence on the US dollar. The Ministry of Foreign Affairs had hinted last October that they could partially replace the dollar in their trade settlements and currency reserves with digital assets and other currencies in the future.
