Idea to Use Digital Ruble as Reserve Currency Circulated in Sanctioned Russia
Faced with mounting Western sanctions, Moscow officials are looking for ways to bypass restrictions that limit Russia’s access foreign reserves and global financial markets.
Sergei Mironov is the leader of the opposition ‘A Just Russia” faction in the Duma. He urged the federal government and the central bank to counter sanctions by introducing the digital ruble. Russian media and Forklog reported.
According to high-ranking parliamentarians, the initiative’s goal is to issue the central banking digital currency ( CBDC ) for specific purposes such as financing housing construction projects and development of transportation infrastructure and production.
Mironov stated that the digital ruble should be a fully-fledged reserve currency and investment for Russia. According to Mironov, the CBDC will give the Russian economy the necessary funding without increasing inflation. He stated that the digital rubles can’t be used for any other purposes or deposited abroad.
Allies in the West fear Russia could use cryptocurrencies, including digital versions of the ruble to avoid sanctions for its invasion of Ukraine. They have taken steps close any loopholes. Alexander Yakubovsky (a member of the crypto regulatory group) stated that Russia is interested using digital currencies in order to restore its access global finance.
The Central Bank of Russia, a strong opponent of legalizing cryptocurrency, has been actively working on the digital ruble project. Three years ago, the monetary authority started to consider a CBDC. In October 2020, a consultation paper was published. In April 2021, the bank published a digital ruble concept that outlined its main architecture.
The CBR announced the first complete transactions between individual wallets this February, kicking off testing of the digital ruble platform. The trials will continue through 2022 and include 12 Russian banks. Bank of Russia claims that its digital currency will open up new opportunities for Russian citizens, companies, and the government.
Russian Federation also tries to reduce its dependence on the U.S. Dollar. The Ministry of Foreign Affairs suggested last October that the greenback could be partially replaced in Russia’s currency reserves, trade settlements and exchanges with other currencies or digital assets.