Russia launches first market trial of state-backed digital ruble

By Al Mayadeen English
Source: Agencies
15 Aug 2023 21:36

The trial will involve 13 banks and 600 people across 11 Russian cities.

A Russian ruble coin is pictured in front of the Kremlin in central Moscow, on April 28, 2022 (AFP)

Russia started phase one of testing its blockchain-based digital currency on Tuesday, as Moscow increases efforts to circumvent the Western-dominated global financial system amid the historic sanctions that targeted the country since the beginning of the war in Ukraine.

"On August 15, the tests of operations with real digital rubles began," Russia's central bank told AFP.

The first trial will involve 13 banks nationwide and 600 people who will be able to process payments at 30 points of sale across 11 Russian cities.

The digital ruble law, approved by Russian President Vladimir Putin, went into effect on August 1. Along with cash (paper money) and non-cash (bank cards), it will become the third type of national currency.

"Operations will be free for citizens and with a minimal commission for businesses" in the long run, the central bank said, noting that the digital currency is expected to be available to all Russians willing to use it "by 2025 to 2027".

Russia's second-largest bank, VTB, announced that it had successfully carried out digital-ruble transactions through its mobile app.

According to monetary experts, Russia became the 21st country to test this technology.

Anti-Russia sanctions have cut off most of its financial institutions from the SWIFT international system, pushing Moscow to move toward creating alternatives in a bid to de-dollarize its economy and trade.

Unlike popular cryptocurrencies such as Bitcoin and Ether, both of which witness high-value volatility and lack the backing of physical assets, the digital ruble will be issued and backed by the Russian state, a factor that would reassure investors willing to hold the currency in virtual wallets.