Russia's Digital Ruble Set to Revolutionise Payments Landscape by 2025

Image: Shutterstock

Russian President Vladimir Putin signed a law granting the country's central bank authority to create the digital ruble, its own digital currency. The digital ruble will operate as a payment method with existing systems, following amendments to Russia's Civil Code. 

This significant project has been under development since 2020, with initial pilot tests conducted in 2022. The official launch is anticipated to take place post-2025, potentially heralding a transformative era in Russia's payments landscape.

With the new legislation, the Central Bank of Russia assumes the digital ruble platform's operator role, guaranteeing its security and continuous operation. The platform's primary function will involve facilitating digital ruble transactions, with commercial banks acting as intermediaries between the central bank and individuals or businesses. 

One of the critical features of the digital ruble is its enhanced traceability compared to existing non-cash payment systems. This heightened transparency enables comprehensive tracking of payment chains and identification of all involved parties in specific transactions. While the initial phase will focus on online transactions, the central bank plans to develop technology for offline transactions.

The primary use case for the digital ruble will be as a means of payments and transfers rather than serving as a tool for deposits or loans. As a result, private entities can anticipate fee-free transactions, while companies will incur a nominal 0.3% fee for their digital ruble transactions.

The law's effective date is August 1, 2023; in the interim, the central bank will conduct pilot projects for a limited number of customers and specific types of operations. 

Deputy Chair of the central bank, Olga Skorobogatova, envisions a future where all citizens have access to digital wallets and can use digital rubles seamlessly between 2025 and 2027. This timeline will depend on a gradual integration process involving various banks.

Russia's digital ruble marks a significant stride towards modernising the country's financial ecosystem and overcoming international sanctions. Powered by distributed ledger technology and smart contracts, the digital ruble provides a glimpse into the future of digital finance.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash