Putin signs law for Russian CBDC

Putin's endorsement of a central bank digital currency comes amid tough Western sanctions and high global inflation.

The Russian president has signed a law introducing a Russian central bank currency. Under the law, Bank Rossii is now authorized to digitally issue its own national currency to citizens. Work on a CBDC for Russia has been underway for several years. A test phase began on April 1 this year. With Putin's approval, the introduction is a reality.

The signed law provides a necessary legal framework and also defines how private banks should handle the CBDC in the future. However, actual use by citizens still seems far away. According to a central bank statement, daily use of the digital currency is not expected until 2025 at the earliest. The adaptation of the CBDC is also voluntary, according to the central bank.

Under Putin's leadership, Russia has been engaged in a war with Ukraine since February 2022. This has led to severe Western sanctions and high inflation. Meanwhile, the ruble is in a downward spiral. For Russia and Putin, the CBDC opens new opportunities to prevent capital outflows and provides an alternative to the SWIFT payment network. Indeed, state banks are excluded from this network thanks to all the Western sanctions.