Russia’s plan to launch a crypto-based “Digital Ruble” is unlikely to help the country evade Western sanctions, according to experts. The new law establishing the Digital Ruble as a legal tender in Russia has come into force, but experts argue that it will not be effective in bypassing restrictions. Although Russian officials have claimed that the Digital Ruble could weaken the US-led financial system, independent experts disagree.
The Digital Ruble is Russia’s version of a central bank digital currency (CBDC) and is based on blockchain technology. It is designed to reduce transaction costs for businesses, enhance security for consumers, and combat corruption. While businesses will be able to accept payments in Digital Rubles, it is unlikely to facilitate international transactions without the involvement of foreign commercial banks or Western financial infrastructure.
Experts argue that the infrastructure required for cross-border CBDC payments is not yet in place. It would require detailed bilateral agreements and technology sharing with other central banks, which could take years to establish. Additionally, the Russian ruble’s low value and concerns about dealing with Russia due to sanctions remain significant barriers to widespread adoption of the Digital Ruble.
Russia has been striving to encourage its trading partners, particularly in Asia, to settle payments in rubles. The use of non-Western currencies and alternative payments systems, such as Russia’s and China’s domestic alternatives to SWIFT, are considered more practical means to evade sanctions compared to the Digital Ruble.
In conclusion, while the Digital Ruble is being introduced as a domestic payments system in Russia, experts believe that it will not be effective in helping the country avoid Western sanctions. The lack of cross-border infrastructure and concerns about the ruble’s viability as a currency are significant obstacles to its success.