Watching your spending

How Russia’s Central Bank plans to use its new digital ruble to monitor and police citizens’ financial activity

In 2025, Russia’s Central Bank plans to fully roll out the digital ruble — a new form of currency that, according to officials, can be used on par with cash and electronic payments, and holds the exact same value as the traditional ruble. The Russian authorities insist that this new tool is safer than cash and that the fees for using it will be lower than for other electronic payment methods. Every digital ruble has its own unique code, which theoretically makes it possible for the Central Bank to restrict its use — and, according to experts from the digital rights group Roskomsvoboda, to monitor citizens’ transactions. Meduza shares an abridged translation of a new article from the independent Russian outlet Verstka about what we can expect from the digital ruble’s adoption.

What is the digital ruble?

It’s not a cryptocurrency.

Russian Central Bank Deputy Director Alexey Zabotkin first announced the digital ruble in October 2020. The issuer of this new form of currency, he said, would be the Central Bank itself; in other words, the Russian authorities would manage its circulation directly. This is one of the key ways the digital ruble differs from conventional bank transfers: responsibility for its use and management will fall on the state, not on banks. When customers deposit funds into their digital ruble accounts, they will effectively be lending their money to the authorities.

At the same time, commercial banks will be responsible for all account operations, as well as for ensuring security. Clients will be able to manage their digital rubles through commercial bank apps. (According to Zabotkin’s announcement, the Central Bank initially explored allowing customers to open digital ruble accounts directly and manage them without going through commercial banks, but this idea proved too expensive.)

Any citizen or organization will be able to open a virtual wallet for digital rubles by simply signing a contract with the Central Bank. Each digital ruble will always be worth exactly one ruble; Zabotkin stressed multiple times in his announcement that the digital ruble is simply an additional form of currency and that there are no plans to do away with cash or cashless payments in Russia.

What’s the point?

Still, there will be some key differences between ordinary rubles and digital rubles. For one thing, it’s possible that the authorities will restrict how digital rubles can be spent; the Central Bank may encode certain rubles, for example, so that they can’t be used for gambling or buying alcohol. When it comes to government spending, contractors might only be able to use the digital rubles they receive for specific purposes, such as buying construction materials or paying salaries, to prevent corruption.

The new tool could also affect the government payments that many Russians rely on. “Digital rubles could also be used to pay out targeted benefits and subsidies, which could make these forms of social support less flexible,” a lawyer from the digital rights group Roskomsvoboda told Verstka. “On the other hand, this could significantly hinder schemes involving the cashing out of maternity benefits or other types of fraud involving the illegal use of social subsidies.”

Additionally, unique codes on each digital ruble will allow the government to directly monitor citizens’ spending when they use the new form of currency, though paying with it will otherwise be scarcely distinguishable from using a regular debit card or cash.

The digital ruble could become a major tool in the Central Bank’s management of Russia’s finances, allowing not only the monitoring of transactions (the government already surveils non-cash payments) but also “instantaneous and direct control over monetary policy.” According to the lawyer from Roskomsvoboda who spoke to Verstka, the government could use it to instantly implement currency redenomination or impose broad restrictions on money use. “During the COVID restrictions, for example, it would have been possible to use digital rubles to ban payments for [travel] tickets and hotels,” the lawyer said.

Another advantage of the digital ruble is that it could be used in the absence of an Internet connection. “This is especially relevant in areas with network issues,” the Central Bank said. In these cases, wallet holders will be able to make payments at stores using their phones, much like they currently do for other cashless transactions — though depositing money into digital wallets, such as when workers receive salaries, will only be possible through the Internet. Additionally, the Central Bank has said the fees for using digital rubles will be low. While bank transfer fees can exceed one percent of a total transaction amount, fees for digital rubles are slated to be set at 0.3 percent for most purchases and as low as 0.2 percent for housing and utilities purchases, with a maximum fee of 10 rubles per transfer.

When will it be released?

According to the Central Bank’s plan, the digital ruble was initially set to go into widespread circulation in 2030. However, the war in Ukraine and international sanctions targeting Russia’s financial system greatly accelerated the process. In 2023, 12 banks took part in an experiment in which digital rubles were used “with real clients.” Testing is still ongoing, and according to the Central Bank, the gradual rollout of the digital ruble is now planned for 2025.