RUSSIAN GOVERNMENT LAUNCHES DIGITAL ROUBLE IN ATTEMPT TO AVOID INTERNATIONAL SANCTIONS

Wed 16 August 2023:

Russia launched consumer testing of its new digital rouble on Tuesday. The country, which has been at war with its neighbor Ukraine for about 540 days, plans to get around international sanctions and tighten control over its people by using blockchain technology.

The Russian ruble has dropped to its lowest level against the dollar since March 2022, one month after Russia began its military campaign in Ukraine, at the same time as the digital Rouble is entering its testing phase.

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, said, “It will enhance Russia’s ability to evade sanctions”.

Russia and 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 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”.

Concerns and more

As per Morch, the launch will give the government “immense control” over citizens and it could be used as “the ultimate social control tool.”

Meanwhile, some NGOs have also voiced their concerns. AFP reports that the Atlantic Council has 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.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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