As the ruble falls and the Bank of Russia (BCR) raises interest rates again to limit price stability risks, Moscow is launching its digital currency via blockchain technology. “VTB became the first bank to successfully test digital ruble transactions in its mobile app,” Russia’s second-largest bank said in a statement. Vladimir Putin’s stated goal is to tighten its financial system and limit the impact of international restrictions.
For now, the digital ruble is in a testing phase. In addition to VTB, twelve banks and 600 more were affected by this test, announced by BCR last week. At this stage, they will be able to make payments at 30 sales points in 11 provinces in the country. Eventually, the BCR argued, “operations will be free for citizens and with a minimal fee for businesses.”
Unlike cryptocurrencies, the digital ruble is issued directly by the BCR and stored in electronic wallets. The FSB’s security services oversee the security of the system. According to critics, this is an element that will allow the Kremlin to have more control over its citizens. But Moscow needs to make payments more secure. Due to Western sanctions, many Russian banks have been removed from the Swift global payment system. Hence the search for alternatives. Moscow hopes to make the digital ruble available to all Russians who want it “by 2025-2027,” according to the Moscow central institute.
Simultaneously with the launch of the digital currency, the BCR raised the benchmark interest rate to 12% from previously 8.5% after holding an extraordinary meeting to address the devaluation of the ruble. “This decision was taken to limit risks to price stability,” the central bank said in a statement. Since the beginning of the year, the Russian currency has lost almost 25% against the dollar and euro.
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Source: Today IT
Karen Clayton is a seasoned journalist and author at The Nation Update, with a focus on world news and current events. She has a background in international relations, which gives her a deep understanding of the political, economic and social factors that shape the global landscape. She writes about a wide range of topics, including conflicts, political upheavals, and economic trends, as well as humanitarian crisis and human rights issues.
