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Digital Ruble Will Spark Russia’s ‘Biggest Monetary Reforms Since the 1990s’

The introduction of the Russian digital ruble is anticipated to initiate the “largest monetary reforms since the 1990s” in the country, according to a media report. The Central Bank Digital Currency (CBDC) project is expected to represent a monumental shift in Russia’s economic landscape, comparable to the transformative events following the collapse of the Soviet Union in the 1990s. The “real-world” pilot for the digital ruble commenced in August of the current year, covering 11 cities nationwide, including Moscow and Yekaterinburg.

The Central Bank of Russia has ambitious plans for rapid expansion in 2024, intending to include at least 16 more banks in the digital ruble pilot. The Ministry of Finance has stated that the government aims to start utilizing the digital currency next year. Additionally, there are suggestions from the ministry that Moscow is aiming for a nationwide rollout no later than 2025. This timeline appears more assertive than the Central Bank’s initial projection of a rollout between 2025 and 2037.

‘Marked Digital Rubles’ to Debut in 2024?

Finance Minister Anton Siluanov has expressed Moscow’s intention to use the digital ruble for “social payments” and the disbursement of “subsidies.” Meanwhile, the Ministry of Finance is actively considering the implementation of a plan to “color” or “mark” certain digital ruble coins. Initially proposed by the Central Bank in September, this approach could enable the bank and others to monitor the utilization of funds allocated for specific purposes. The Deputy Governor of the Central Bank had previously mentioned that “color-coded” digital rubles might be employed for issuing “state budget funds.”

Finance Minister Anton Siluanov has indicated that the ministry plans to commence the year by piloting various Treasury payments, potentially including subsidy transactions, using the digital ruble. Moreover, there are considerations within the ministry to experiment with “marked” digital ruble-powered child benefits and pensions in 2024. The practical application of CBDC “coloring” could be exemplified in the area of child benefits, according to the media outlet.

ProGorod suggested that “[Colored digital rubles] could be used to ensure child benefit payments are used as intended, and not to pay off loans and fines.” This approach is seen as a means to control and direct the use of funds for specific purposes.

In a related development, the government recently signaled its intention to enhance the authority of Russian bailiffs to seize CBDC coins and other cryptoassets.

However, not all lawmakers are in agreement with the Central Bank’s digital ruble plans. Some MPs advocate for a shift from the current retail model to a wholesale Central Bank Digital Currency (CBDC) model.

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