Russia rolls out digital ruble as Kremlin tightens financial control

Business

3 July, 12:54 PM

Author: Alex Stezhensky
Russia is ready to launch the digital ruble for broad use starting Sept. 1, Central Bank Governor Elvira Nabiullina said, The Moscow Times reported on July 2.

Starting Sept. 1, all 12 systemically important banks must process digital ruble transactions, and major retailers will also accept the currency as payment. “Technologically, everything is ready. We did a great deal of preparatory work before this stage,” Nabiullina said.

It is unclear which other banks will work with the digital ruble. The Central Bank unexpectedly withheld the list of banks participating in the digital ruble platform.

The digital ruble will allow authorities to see the full history of transactions, giving them the ability to monitor the intended use of budget funds. Public-sector employees may choose to receive salaries in digital rubles, but the Central Bank and Finance Ministry have promised not to force it on them.

Most Russians show little interest in using the digital ruble. They do not understand why they need a third form of money in addition to cash and cashless payments. The digital ruble remains a “poorly understood abstract category” for most people, a VTsIOM poll showed. According to a SuperJob survey, only one in 10 economically active Russians is ready to receive all their pay in digital rubles, while another 5% would agree to receive part of their income that way.

Demand for cash is now rising in Russia because of internet shutdowns and statements about the possible freezing of bank deposits. While developing the digital ruble, the Central Bank had envisioned that it could also be used offline, but that feature has not yet been implemented.

Still, the Central Bank is planning the digital ruble’s further development. At first, only the Central Bank will open wallets, but Nabiullina said officials are discussing whether banks could also do so. “The project is moving forward. We want the digital ruble to be genuinely in demand among people and businesses, and to be convenient ... We see great potential in the use of smart contracts for business,” Nabiullina said.

The Central Bank is preparing to introduce payments in digital rubles. It will pay banks a commission for processing salary payments in digital rubles: 67 kopecks for each completed instruction, but no less than 10 rubles for payments to all employees.

Earlier reports said Russia would begin paying salaries in digital rubles. Ukraine’s HUR military intelligence agency said the move was designed to tighten state control.

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