The launch of Russia’s CBDC, the digital ruble, is expected to have a significant impact on de-dollarization efforts in the country, according to former government minister Sergei Kalashnikov. Kalashnikov, who served as the Minister of Labor and Social Development and the first deputy chairman of the Sate Duma’s Committee on Economic Policy, believes that the digital ruble will help combat black market dollar trading, a phenomenon that has plagued Russia since Soviet times.
One of the main advantages of the digital ruble, as highlighted by Kalashnikov, is its potential to reduce the amount of official currency circulating in the black market. By allowing for more efficient and transparent currency exchange, the digital ruble will help adjust the value of the ruble and limit the growth of the US dollar against the ruble. This is particularly important as the ruble’s value against the USD has fallen sharply in recent months, declining by over a third in the past year.
The Central Bank of Russia has been actively working to reverse the depreciation of the ruble, and the launch of the digital ruble is seen as a key component of this strategy. To test the real-world applications of the digital ruble, the bank initiated an 11-city pilot last month involving 600 Russian citizens and 13 commercial banks. The results of this pilot will provide crucial insights into the feasibility and effectiveness of the digital ruble.
Apart from its potential impact on the domestic economy, Russia also sees the digital ruble as a tool for de-dollarization in international trade. The Kremlin has been striving to reduce its reliance on the US dollar since 2014, and the digital ruble presents a promising opportunity to achieve this goal. Additionally, Chinese scholars have recently suggested that digital fiats could help countries like Russia and its allies break away from dollar hegemony.
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However, Kalashnikov’s comments indicate that the digital ruble also aims to target the domestic black market, which has reportedly thrived under Western-led sanctions. Critics argue that citizens’ savings are being eroded due to the ruble’s devaluation, and the Central Bank’s introduction of the digital ruble is expected to alleviate this issue. While the bank has reassured citizens that cash will not be outlawed and the use of the digital ruble will not be forced, it has raised the possibility of “marking” tokens in certain situations to allow for better traceability of transactions.
This potential measure could pose a significant threat to the ruble-USD black market, as it would make it easier to track and regulate transactions. Nevertheless, some experts believe that this could lead to an increase in the use of cryptocurrencies to send Russian money abroad. In fact, Transparency International’s Russia branch has already reported evidence of Russians using the USDT stablecoin to send money to destinations such as the UK through illicit Moscow-based crypto exchanges and brokers.
In conclusion, the launch of Russia’s digital ruble holds considerable promise for both de-dollarization efforts and combating the domestic black market. By providing a more secure and traceable form of currency exchange, the digital ruble is expected to help stabilize the ruble’s value and reduce the country’s dependence on the US dollar. As the pilot programs progress and regulatory frameworks for the digital ruble are established, it will be interesting to see the long-term impact of this CBDC on Russia’s economy and its relationship with the global financial system.
