The State Duma of the Russian Federation has finally introduced amendments to several federal laws intended to ensure the adoption of the digital ruble. The amendments will come into force on August 1, 2023. Until December, the authorities are to decide who will have access to the new technology. The Central Bank has been appointed the platform’s operator.
Amendments have been introduced to the Federal Laws “On Banks and Banking Activities”, “On the Central Bank of the Russian Federation (Bank of Russia)”, “On Insolvency (Bankruptcy)”, “On Currency Regulation and Currency Control”, “On Enforcement Proceedings”, and some others.
What is a digital ruble?
No definition of the digital ruble is provided in any of the Federal Laws. However, basically, this is an additional form of money that will be used along with cash and non-cash money. This is a digital code — a record in the operator’s system containing information about the account balance and transactions.
The digital ruble platform is defined as “an information system which allows the platform’s operator, participants, and users to interact with each other and conduct transactions with the digital ruble in accordance with the platform’s rules.”
The notions of “a user” and “a participant” are clearly distinguished. A user is an individual, a legal entity, or an individual entrepreneur who accesses the platform to conduct transactions with the digital ruble, while a participant is a money transfer operator (except for the Bank of Russia) or a foreign bank that provides the platform’s users with access to the platform for conducting transactions with the digital ruble.
All the amendments imply that digital ruble transactions will be completely secure which will be ensured by the Central Bank.
The opportunities of the digital ruble
Currently, the new form of money is intended exclusively for transactions and transfers between the users. The digital ruble transactions will only take place within the platform. In the meantime, there will be no loans in the digital ruble, and no interest is to be accrued on balances in digital wallets of the platform’s users.
The users will also be unable to open a joint digital ruble account or a precious metal account, and form groups of digital ruble accounts. At the same time, the digital ruble can be confiscated.
Interestingly, when closing a digital ruble account, a user can transfer the money to another account, but cannot withdraw the funds.
Will the digital ruble be of use?
Experts are divided on this issue. For example, Oleg Ushakov, the founder of the SAGRADA LEGAL law firm, an expert in digital rights and financial transactions, ex-advisor of the Bank of Russia, and creator of the “Pravo na dengi” (Right to Money) Telegram channel, believes that the digital ruble is, first and foremost, a means of controlling transactions, including public expenses. He believes that the introduction of the digital ruble is associated with minimizing the number of intermediaries, ensuring cheaper and faster transactions, as well as the ability to control the targeted use of funds, including project financing. He adds that the new form of currency is required, in particular, for the circulation of new digital assets, and for ensuring immediate payment in such transactions.
Dmitry Prokofiev, an economist and creator of the “Dengi i pesets” (Holy Money) Telegram channel, believes that the digital ruble is introduced with the sole purpose of controlling the population. Anyone who wishes to use the digital ruble will be included in the Central Bank’s unified register, and all the bank cards will be connected to the register — it is hardly a coincidence that one of the alleged advantages of the digital ruble system is the possibility of access from any bank account. Such a digital wallet register will be a very powerful means of controlling the population — “one false step, and the regulator can block your accounts without notice,” says Prokofiev.
The Central Bank has responded to such speculations by explaining that the digital ruble does not entail any increase in control.
“The amount of information about citizens in digital ruble transactions will not go beyond the amount of information that is already provided for non-cash transactions. The information on digital wallet balances and the digital ruble in general will be protected by bank secrecy in the same way as information on bank accounts.”
