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Russia intends to use its digital ruble, due to be introduced early next year, for payments with its main ally, China. Authorities in Moscow hope other nations will be willing to adopt the Russian digital currency in trade, which would allow the country to circumvent sanctions imposed over the Ukraine war.
Russia’s central bank is preparing to launch settlements with the digital ruble, the new incarnation of the Russian fiat currency currently being tested, as early as 2023. According to a statement from a prominent member of the lower house of the Russian parliament, the sanctioned nation wants to use it in payments with China, which has become Russia’s most important trading partner.
Limited access to the global financial system due to economic restrictions imposed in response to its military invasion of Ukraine forces Russia to seek alternative means of foreign trade transactions. Alongside cryptocurrencies, the digital ruble is one of the options Moscow is considering in its attempts to circumvent the sanctions.
“The topic of digital financial assets, the digital ruble and cryptocurrencies are currently intensifying in society, as Western countries impose sanctions and create problems for bank transfers, including in international settlements,” the head of the Financial Market Committee of the State Duma. , Anatoly Aksakov, recently told the Parlamentskaya Gazeta newspaper.
The senior lawmaker elaborated that the digital direction is key because financial flows can bypass systems controlled by unfriendly nations. He added that the next step for the central bank digital currency (CBDC) issued by the Bank of Russia would be to introduce it in mutual settlements with China. Also quoted by Reuters, Aksakov stressed:
If we launch this, other countries will start actively using it going forward, and US control over the global financial system will effectively end.
With the loss of markets in the West, including for energy exports, the importance of cooperation with China has increased significantly for Russia. Trade between the two countries has expanded and Russian companies have started issuing debt in Chinese yuan. Beijing is currently conducting domestic trials of its digital version, e-CNY, and plans to use it in cross-border settlements as well.
Russia is preparing to adopt comprehensive regulations for its crypto market in the coming months, including a new bill “On Digital Currency” that will expand the legal framework established last year by the law “On Digital Financial Assets.” Russian regulators are already in the process of developing a mechanism for international crypto payments, and the respective draft regulations have already been agreed upon by the central bank and the Ministry of Finance.
Do you think China will accept the digital ruble in settlement with Russia? Share your expectations in the comments section below.
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