The Bank of Russia introduced the idea of a Russian Central Bank Digital Currency (CBDC) in late 2020 when it published a white paper titled "The Digital Ruble."
"The Bank of Russia intends to enhance money circulation to meet the changing needs of individuals and businesses," the document stated. "Therefore, the Bank of Russia is exploring the possibilities and prospects of introducing a digital ruble the digital form of the Russian national currency."
No timeline was mentioned at the time. Since then, President Vladimir Putin's invasion of Ukraine and the exclusion of Russia from the international bank transfer system, SWIFT, has inspired the country to explore new ways to transact with its most important economic partner China.
"The topic of digital financial assets, the digital ruble, and cryptocurrencies is currently intensifying in society, as Western countries are imposing sanctions and creating problems for bank transfers, including in international settlements," Anatoly Aksakov, head of the financial committee in Russia's Lower House of Parliament, told a state-run newspaper.
Digital currency is essential because it can bypass financial systems controlled by countries that oppose Putin and the war in Ukraine, he added.
After the projected launch in 2023, Russia intends to use the digital ruble in settlements with China.
Russia's implementing of a CBDC may also be an attempt to fight global and western influences, like the dominance of cryptocurrencies like Bitcoin for transfers of value.
The Bank of Russia and the Russian government have been wrangling this year to find a clear regulatory structure that handles digital currencies.
Aksakov is looking for clear legislation by the end of the year.
China, meanwhile, has tested the digital yuan, so using a digital ruble should help mutual settlements between the two nations.
"If we launch this, then other countries will begin to actively use it going forward, and America's control over the global financial system will effectively end," said Aksakov.
With both countries utilizing CBDCs, Russia and China can deal directly with each other and reduce their dependence on Western payment channels.
Last week, China announced the release of the new digital yuan app for iOS and Android on domestic app stores. It is available to users in 23 cities across China.
* Cover based on image by Gerd Altmann from Pixabay
