What is a digital ruble and how to use it

Russia continues to test the digital ruble, which will become another type of national currency. Izvestia reports on what the new national currency is, what makes it different from cryptocurrencies, and when it is planned to launch the project for mass use.

What is a digital ruble

Today, cash and non-cash forms of payments are available in Russia. In 2023, the president Vladimir Putin signed the law on the introduction of the third form of national currency — the digital ruble. It is a unique digital code that will be stored in digital wallets on a special Central Bank (CB) platform.

In simple terms, the digital ruble is a virtual form of the ruble that will exist simultaneously with conventional paper and coin money. At the same time, the cost of goods and purchasing power will not change with the transition to the use of digital means. One digital ruble will be equivalent to one cash ruble.

It will also be possible to pay for goods and services in digital rubles, postpone them, or send them by transfer to friends and relatives. However, you will not be able to open a deposit or get a loan in digital rubles. No interest will be charged on the remaining funds in digital rubles.

Why the digital ruble is needed

The digital ruble is being created in order to become another means for payments and transfers that will not depend on bank restrictions in the form of fees and limits. It will be possible to manage funds in the interface of the mobile banking application, in which a new "Digital Ruble" window will appear.

All operations with the digital ruble are close to the usual transfers. Moreover, it will be possible to pay using digital assets offline, even without an Internet connection, which is especially important for the Russian hinterland and remote places with unstable communications.

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Operations for citizens will be completely free of charge. The new national currency will allow them to freely pay and transfer digital rubles within the limits of the remaining funds in the digital wallet. The minimum commission is provided only for business representatives.

The innovation will also allow for direct settlements with other countries developing their own digital currencies, bypassing the international SWIFT system. This is important in connection with Western sanctions that have restricted the access of Russian banks to this system.

Currently, digital money is used in Nigeria and several Caribbean countries. The development of such a form is underway in France, Canada, Uruguay, the Republic of South Africa (South Africa), South Korea and the United Arab Emirates (UAE).

How does the digital ruble differ from the cryptocurrency

Both the digital ruble and the cryptocurrency are varieties of digital currencies. However, there is a significant difference between them. The digital ruble is a national monetary instrument that is backed by the country's gold and foreign exchange reserves. Only the Bank of Russia can issue it.

Cryptocurrencies are very unstable, as their exchange rate largely depends on supply and demand, which can change dramatically depending on circumstances. Also, the price of cryptocurrencies, unlike the digital ruble, is not provided with any resources, which carries risks for investors.

Thus, the digital ruble can rather be considered as an alternative to cryptocurrencies, which do not have a single issuer — an organization that issues securities for the development and financing of its activities.

When will it be possible to use digital money

The digital ruble project is currently operating in a pilot mode. In February, the head of the Central Bank, Elvira Nabiullina reported that about 30 companies and about 1,700 citizens are taking part in it. She explained that the implementation of the digital ruble is going well, but the launch of the project has been postponed to a later date than originally planned due to the need for improvements.

In the same month, Anatoly Aksako, head of the State Duma Committee on Financial Markets told Izvestia that the launch of the digital ruble was postponed until at least 2026. According to him, it probably won't start working until next summer. He attributed the reasons for postponing the date to the lack of resources from a number of credit institutions needed to develop the necessary technological base.

Some experts predict that the mass introduction of the new national currency will take place no earlier than 2027, after the project has been finalized and adapted to the real conditions of the business and financial system of the country.

Earlier, Izvestia told about possible schemes of fraud with the digital ruble.