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Digital Ruble a post COVID necessity for Russia

Digital Ruble, a post-COVID-19 necessity for RUssia

  • Russian announced Digital Ruble to tackle Bitcoin issue.
  • Digital Ruble aims to support Russian digital and financial economies.
  • Post-COVID-19 race has made it inevitable for countries to launch CBDCs.

Central Bank of Russia officials are in the process to launch a licit central bank control substitute to Bitcoin currently dubbed the “Digital Ruble”. In the post COVID-19 world, Russia has so far been lagging behind China and USA in the war to dominate the digital financial world.

Central Bank of Russia is inclined towards digital trade instead of prohibiting cryptocurrency across the country, deeming blockchain technology an unregulated threat to the digital and financial economies. In a bid to enter the world of smart transactions and digitally enhanced solutions, Russia’s version of cryptocurrency will be available to not just financial institutions but also citizens.

The rationale for Digital Ruble

Alexey Zabotkin, Deputy Governor, CBR explains that designed to meet the needs of new and existing banking institutions, the Digital Ruble seeks to diminish the current requirement of unregulated monetary solutions within the blockchain structure.

Online purchases, fund transfers, tax payments, state identified contractual dealings with households, foreign currency exchange are a few areas initially expected to witness enhancement through the recognized, reliable and regulated Russian crypto version.

Russia is not the only country attracted to the boom of the crypto-world. On the one hand, Uruguay, Ukraine, and Ecuador are testing their upcoming central bank digital currencies (CBDCs). While on the other hand, South Korea, China, and Sweden are running pilots project testing their respective CBDC launch’s efficacy.

Zabotkin raised concerns over the chance of a temporary destabilization within the banking industry through a liquidity shortage upon digitization of money but, on the other hand, will encourage the long term preservation of finances through an added supply of liquidity. By the end of the year, a final decision on implementation of the Digital Ruble is guaranteed.

Sova Capital brokerage reported the project as currently set at phase 1 of  7 phases and is said to attract a thick potential of consumer transactions upon launch as opposed to current conventional trading numbers, expected in the process to facilitate smart contracts and cost reductions. All of this without worrying about security, credit risks, and other uncertainties attached to cryptocurrencies.