The governor of the Central Bank of Russia has announced that the country plans to create a state-backed cryptocurrency called Digital Ruble.
Russia has been working hard to expand the use of MIR bank cards. Major cryptocurrency exchanges are closing their doors to Russian users due to numerous sanctions. This will probably be one reason why the digital currency has become so important.
The Central Bank of Russia is developing a digital version of the Russian ruble. The launch schedule is expected to be next year. It was also stated that the aim was to circumvent western sanctions.
Central Bank Governor Elvira Nabiullina has announced plans to launch a digital currency as early as next year. More specifically, Nabiullina said:
"The digital ruble is among the priority projects. […] We created a prototype relatively quickly. […] Now we are conducting tests with banks and over the next year we will gradually conduct pilot transactions."
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The Central Bank of Russia will conduct tests of CBDC, a state-backed digital currency, by the end of the year, First Deputy Chairwoman Olga Skorobogatova said at the Moscow Financial Forum.
Goal of the digital ruble: to avoid sanctions
The value of Russia's traditional currency, the ruble, has plummeted in recent months. This has contributed to the country's initiative to create a state-backed digital currency.
Due to the sanctions imposed by Western countries, Russia is forced to find alternative ways to remain involved in the global financial system.
Nabiullina also said the bank plans to develop a system alongside the digital ruble that will allow citizens and businesses to use other currencies. These measures will help attract investment in the country's financial sector and boost economic growth.
Despite the challenges posed by the increasing Western sanctions against Russia, MIR and UnionPay of China have maintained their partnership and intend to expand their reach in influential markets.
Sanctions in the crypto space
Cryptocurrencies are payment systems that use cryptography to create digital currencies and verify transactions. One of their main advantages is said to be the anonymity of the payments; however, most major cryptocurrency exchanges have now closed their doors to Russian customers.
Binance announced that it will restrict user accounts held by Russian nationals and local companies with a value over EUR 10,000. Affected users can still withdraw their funds, but cannot make new deposits or trade.
British crypto exchange EXMO, which also has offices in Russia and Belarus, recently announced the sale of its Russian and Belarusian businesses due to the uncertain regulatory environment in those countries.
As part of the new round of EU sanctions against cryptocurrencies, Binance has been hit with restrictions that would have made Binance less attractive to do business in the EU and Russia.
EXMO was not affected by the EU sanctions. This platform currently rates Russia and Belarus as high-risk markets, putting EXMO's global expansion plans at risk.
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