This October marks five years since the Bank of Russia officially announced its Digital Ruble project. In that time, the initiative has evolved from a concept into a practical tool now being actively integrated into the nation’s financial system. But what exactly is the digital ruble? How is it different from the money we use now? And what will it mean for individuals, businesses, and the state? Let’s take a closer look.
The concept of a digital ruble was first floated in 2019, with the Central Bank of the Russian Federation beginning development in 2020. This period coincided with a global surge of interest in cryptocurrencies, like Bitcoin, which prompted many world powers to explore their own Central Bank Digital Currencies (CBDCs). Russia was no exception. The country’s authorities began considering the creation of an additional form of national currency, one that could merge the reliability of cash with the convenience of cashless payments.
As the digital ruble was being developed, the Central Bank engaged in discussions with banks, businesses, and experts about the concept of a national cryptocurrency. A few years later, this work led to the launch of a pilot project joined by several major financial institutions.
“The digital ruble entered its first testing phase in 2023,” notes Kairat Bermukanov, DBA, president of the hedge fund IBF TRUST. “Just recently, the Russian Treasury announced that it had, for the first time, paid a government employee’s salary in digital rubles. It is quite possible that in the near future, salaries in digital rubles will become routine for many citizens. The national cryptocurrency will function much like today’s non-cash money: transfers can be made via QR code, phone number, or through the government services portal. In essence, the digital ruble will serve as a state-controlled alternative to existing payment systems. Funds will be held in a dedicated digital wallet, managed directly by the Central Bank.”
How will the digital ruble function?
Although often referred to as Russia’s “national cryptocurrency,” the digital ruble differs significantly from traditional cryptocurrencies. It will be stored in a dedicated digital wallet, but access to this wallet will be provided through a bank’s mobile application. Even though the technology is still in the testing phase, the plan is for the digital ruble to remain usable even without internet connection.
“Currently, Russia has two forms of money: cash and non-cash rubles. The digital ruble is designed to become a third form,” explains Kairat Bermukanov. “What sets it apart from well-known cryptocurrencies like Bitcoin or Ethereum is its state-controlled nature. Traditional cryptocurrencies are created on the basis of blockchain technology and operate without a centralized authority. Blockchain is a distributed ledger that records transaction and issuance data across thousands of computers, making the system immutable and resistant to shutdown. It is unlikely that a national digital currency, issued and regulated by the Central Bank, will possess the same features as cryptocurrencies. While cryptocurrencies offer anonymity, using the digital ruble will require full identification of the user. In essence, despite the word “digital,” the digital ruble is simply another form of state-issued money, much like the non-cash transactions we already use.”
Both individuals and businesses will be able to use the digital ruble. For companies, adopting this new form of currency could lower acquiring costs. However, questions remain about how it will be regulated in terms of taxation and accounting. Nonetheless, pilot transactions have already been carried out, involving individuals, companies, major banks, and retail chains.
“As the digital ruble expands, economic policymakers responsible for developing strategies will inevitably have to find a compromise to offset lost revenue in the banking sector. This will result, at minimum, from a shrinking resource base and the migration of part of bank clients’ funds into digital rubles – even considering that digital ruble balances will not accrue interest,” Prof. Artem Genkin, President of theCenter for the Protection of Depositors and Investors, warns.
What does this mean for citizens?
For everyday users, the digital ruble will introduce a new way to store and transfer money, potentially replacing traditional bank cards. Transactions are expected to be extremely fast and inexpensive. Businesses will benefit from lower costs and greater transparency in payments to citizens, while the government will gain new tools for monitoring cash flows and combating the shadow economy.
Over the past five years, the concept of the digital ruble has evolved from a theoretical idea into an actual financial instrument, gradually becoming part of daily life. In the coming years, it could become as common as bank cards or online banking.
The rollout of the digital ruble is being conducted jointly by the Bank of Russia and the Ministry of Finance. Starting January 1, 2026, digital ruble accounts will be available to all citizens without exception. The Ministry of Finance once again emphasizes that the digital ruble will also be used for transfers between different levels of the national budget system as well as for various payments made through the federal budget.
By Alena Narinyani