Bank of Russia to Begin Testing of Digital Ruble | Photo: Reuters

Russia will start testing a digital currency—the digital ruble—today.

The Bank of Russia worked with 13 domestic banks for the digital currency’s pilot test, including opening accounts, conducting transfers, bill payments and QR code payments. The list of participating banks and businesses will expand next year and the currency is expected to fully launch in 2025.

Russia’s digital ruble is a Central Bank Digital Currency (CBDC): an electronic currency issued by a country’s central bank in the fixed denomination of the national currency. Unlike cryptocurrencies, a CBDC does not fluctuate in value and is simply the digital version of a country’s fiat currency. Many countries are currently experimenting with CBDCs and a handful have already launched, including in Nigeria, Jamaica and the Bahamas. 

Whether Russia’s digital ruble will be successful remains unclear, as many Russians appear to be wary of such a new currency. Moscow’s ambition to fully introduce its CBDC is likely an attempt at circumventing sanctions, which cut Russia off from trading in US-Dollars and blacklisted the country’s companies from the Euro-market. The digital ruble could make international transactions easier, but only with markets that still want to trade with Russia. Therefore, it is unlikely to significantly mitigate economic sanctions.