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Russian President Vladimir Putin has reportedly signed a bill which was focused on Central Bank Digital Currency (CBDC)
The concept of money has transformed throughout history. It has progressed from goods to the introduction of metal coins, paper currency, and plastic cards. The latest development in this evolution could be the adoption of Central Bank Digital Currency (CBDC). Russian President Vladimir Putin recently enacted a law permitting the use of CBDCs.
Countries are Launching CBDCs
The trend of countries launching CBDCs is on the rise. According to the CBDC Tracker by the Atlantic Council, 11 nations have already introduced CBDCs, and 21 others have tested them. Additionally, 79 countries are actively developing their digital currencies.
Despite the increasing number of transactions, there remains a question as to whether central banks should embrace digital currencies. The Harvard Business Review (HBR) notes that over 90% of today’s circulated money exists in form. This combined with cash usage declining more rapidly due to the ongoing global health crisis.
Moreover, Putin’s approval for using the ‘Digital Ruble’ for payments is aimed at aiding companies in circumventing sanctions through digital tokens and CBDCs. The State Dumas Committee on Financial Markets endorsed modifications to the bill. These were expedited at the end of February and passed on to the Federation Council on March 6.
In addition to this, The new law seeks to establish a regulatory framework for foreign trade transactions using digital assets as a means of payment. It is expected to partially mitigate the impact of sanctions on Russia. These have frozen Russian banks out of the global trade picture and put an end to dollar-denominated trade.
Aksakov Praises CBDCs
Chairman Anatoly Aksakov of the Committee stated that the use of digital assets in foreign trade transactions would help Russian importers and exporters work more efficiently with friendly countries. Several Russian allies have also expressed interest in using digital assets and CBDCs in trade deals with Moscow.
The new law grants Russia’s Central Bank new regulatory powers over the payments sector. The bank is already the sole issuer of the digital ruble and the primary regulator of the fast-growing Russian digital financial assets (DFAs) space. The bank will now have the authority to regulate transactions made using DFAs. Firms that use DFAs and CBDCs in payments will be required to log all transactions on a newly created information system.
On the other hand, The new law recognizes a broad range of digital assets as DFAs, including digitized commodities, securities, digital rights, and digitized monetary claims. Additionally, investors will be able to purchase digital shares in unlisted Russian companies under the new law.
Summary
Russian President Vladimir Putin signed a law allowing the use of digital financial assets, including the ‘Digital Ruble’ for international payments. This move aims to help domestic companies bypass sanctions using digital tokens and CBDCs. Many countries are already using or researching similar digital currency options.
Disclaimer
The views and opinions stated by the author or any people named in this article are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading in stocks, cryptos, or other related indexes comes with a risk of financial loss.
Mr. Pratik chadhokar is an Indian Forex, Cryptocurrencies and Financial Market Advisor and analyst with a background in IT and Financial market Strategist. He specialises in market strategies and technical analysis and has spent over a year as a financial markets contributor and observer. He possesses strong technical analytical skills and is well known for his entertaining and informative analysis of the Financial markets.
