Idea to Use Digital Ruble as Reserve Currency Circulated in Sanctioned Russia – Finance Bitcoin News

A call to make the digital ruble a reserve currency has been issued in the State Duma, the lower house of Russia’s parliament. In the West, there are concerns that the Russian fiat’s new form could be used as a way to bypass sanctions.

The Lawmaker proposes that the digital ruble be used as a reserve currency

In the face of mounting Western penalties, officials in Moscow have been mulling over ways to circumvent restrictions that have already limited Russia’s access to its foreign reserves and the global financial market.

Sergei Mironov, who leads the opposition ‘A Just Russia’ faction in the Duma, urged the federal government, the central bank, and the operational headquarters on countering sanctions to introduce the digital ruble, Russian media and Forklog reported.

A high-ranking member of parliament has stated that the intention of the initiative is for the central bank to issue digital currency (CBDC). This will be used for funding housing construction and the development of transport infrastructure and production.

“The digital ruble should become a full-fledged investment and reserve currency for Russia,” Mironov elaborated. According to Mironov, the CBDC can provide Russia with the necessary funding and not increase inflation. The deputy stated that digital rubles could not be transferred abroad and cannot be used for unintended purposes.

Allies in the West fear Russia could use cryptocurrency, which includes the digital ruble, as a way to avoid sanctions for its invasion of Ukraine. They have also taken measures to plug the gaps. Alexander Yakubovsky a lawmaker and member the crypto regulatory work group indicated recently that Russia may be interested in digital currency to restore access to global financial markets.

CBR, the Central Bank of Russia (CBR), is a staunch opponent of legalizing cryptocurrency. However, they have been active in developing digital rubles. Since three years ago, the central bank began to contemplate a CBDC. An October 2020 consultation paper was published. In April 2021, the bank unveiled a digital ruble model that detailed its primary architecture.

The CBR announced the first transactions between individual wallets this February, kicking off testing of the digital ruble platform. Twelve Russian banks are expected to participate in trials that will last through 2022. Bank of Russia claims that its digital currency will open up new possibilities for Russian citizens and businesses.

Russian Federation also tries to reduce its dependency on the U.S. Dollar. Last October, the Ministry of Foreign Affairs hinted that it’s possible to partially replace the greenback in Russia’s currency reserves and trade settlements with other currencies and even digital assets in the future.

Is Russia likely to be able use the digital ruble both as a reserve and to get around sanctions? Please share your views on this topic in the comment section.

Lubomir Tatsev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.