Russia on Tuesday started consumer testing of its new e-currency, the digital rouble. Utilising blockchain technology, the nation that has for the past almost 540 days began engaged in a war with neighbouring nation Ukraine, intends to bypass international sanctions and also tighten control over its citizens.
This testing phase of the digital Rouble coincides with the Russian currency falling to its lowest position against the dollar since March 2022 — the launch of its military campaign in Ukraine.
AFP reports that while Russia has been contemplating the launch of a digital currency for years, its inception actually gained momentum after Western sanctions on the nation’s access to the global banking system.
Joining the ranks of 20 other nations globally, Russia’s launch of the digital currency pilot phase aims to make its financial system more flexible while limiting the impact of international sanctions.
Speaking to the news agency, Mikkel Morch, founder of crypto-focused investment fund ARK36, says “It will enhance Russia’s ability to evade sanctions”.
Following the launch of its military offensive, Russia was at the receiving end of many sanctions, including ones that banned many Russian banks from the main system used for international transactions. This put Moscow in a vulnerable position and pushed the nation towards innovating ways to ‘de-dollarise’.
Morch said that the digital currency will help Russia bypass banks and the restrictions. Blockchain is “much less easy to sanction and attack,” he said, adding that the launch is “part of a geopolitical war between pro-dollar countries and anti-dollar countries”.
As per Morch, the launch will give the government “immense control” over citizens and that it could be used as “the ultimate social control tool.”
Some NGOs have also voiced their concerns. AFP reports that Atlantic Council have warned “In the wrong hands, this data could be used to spy on citizens’ private transactions.”
Russians too are reportedly not convinced and remain sceptical. A survey by state-owned pollster VCIOM revealed that approximately six out of ten Russians have a “weak understanding” of the government’s motives and are hesitant to embrace the currency.
(With inputs from agencies)
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