The law on the digital ruble
According to the published text of the law, the digital ruble will be issued by the Central Bank of the Russian Federation, which will act as the operator of the Russian state digital currency platform. The conversion rate of ordinary rubles into digital rubles will be 1 to 1. It will be possible to get access to digital rubles at any commercial bank.
Tariffs for operations with digital roubles will be developed by the Central Bank of the Russian Federation. Until they’re approved. The digital ruble will only be used for payment purposes: you will not be able to get a loan in digital rubles or interest on the balance.
Your account may be suspended if you, the holder of the digital ruble, violate the rules of the CBR platform.
The law will come into force on August 1, 2023 in a test mode. Actually, for this purpose and developed historically the first cryptocurrency.
The digital ruble has none of the above. It both “prints the digital rubles”, is responsible for the security of the accounts, and is the operator of the platform.
There is no need to talk about decentralization, as well as the lack of necessary financial intermediaries. To begin with at least, the whole system will be linked to ordinary commercial banks. There is a hint of this in the law itself, verbatim: “A digital steering wheel is not a digital currency”. It is clear that the law does not speak about cryptocurrency either (there is no such definition in the regulatory framework);
Why do we need a digital ruble in the first place?
The purpose of the digital ruble
It is worth distinguishing between two points of view: official and unofficial. It is set out on the CBR website. Representatives of the regulator highlighted the benefits for citizens and businesses, the financial market and the state at once.
In the opinion of the Central Bank of the Russian Federation, the greatest number of benefits will arise for Russian citizens. Benefits include:
- public accessibility, as digital rubles will be available at any bank;
- a single system of low tariffs (we will see how it will be in practice);
- offline accessibility;
- increased security;
- innovativeness;
- improved customer service.
The benefits to the financial market are half the size:
- increased competition;
- introduction of modern innovations in the form of smart contracts;
- the emergence of new payment infrastructure.
It is argued that the least benefits will accrue to the state. There are only two points here:
- reducing the cost of managing payments to the budget;
- potential simplification of cross-border transfers.
And here’s an unofficial viewpoint of a slightly different sort. Each digital ruble will have a unique marking in the form of a code. Thus, it will be no different from its paper/electronic counterpart. Or at least, according to Elvira Nabiullina, it will be used in international settlements;
There are questions about the issue and its consequences (including inflation).
What should we expect in the near future?
Prospects for the digital ruble
Although the law says that its provisions will come into effect on August 1, 2023, it doesn’t mean that on exactly that date you will be able to receive your salary in digital rubles or pay for purchases with them. The CBDC walk will be worked out both technically and legally. Note that now only 15 banks will participate in the testing of the digital ruble. In reality, there are dozens more credit organizations in Russia.
If anyone fears that everyone will be converted to digital rubles at once, this will definitely not be the case. Firstly, it is now officially stated that the use of the new form of money is voluntary. Secondly, the process of implementing the digital ruble will take time. Legislation in the field of cryptocurrencies can not work out for quite a long time. Until recently, there was no clear definition of the concept of mining. And here it is necessary to carry out the physical realization. The process will definitely not be a one-step process;
In short, the much-talked-about law on the digital ruble simply set a time frame for the beginning of a new stage of introduction of another form of fiat money in Russia. The legislator made it clear: the digital ruble has nothing to do with cryptocurrency.