Russian Lawmaker Proposes Digital Ruble to Dodge Western Sanctions

A member of the Russian opposition has called on the federal government and the central bank to hasten the issuance of the digital ruble, or central bank digital currency (CBDC), to circumvent some of the Western nations’ financial sanctions.

Sergei Mironov, leader of the “A Just Russia” faction in the Duma, suggested the Russian central bank issue the CBDC for construction and housing projects, including the development of production and transportation infrastructure.

“The digital ruble should become a full-fledged investment and reserve currency for Russia,” he said.

The digital ruble would enable the cash-strapped country to generate additional funds while taming inflation, he claimed.

According to Mironov, the proposed CBDC could not be deposited abroad or used for purposes other than what it was intended for. 

Mironov forwarded the proposal in the face of the far-reaching economic sanctions imposed by the West and its allies that have limited Moscow’s access to its foreign reserves and the international financial market.

Since the imposition of the sanctions, Western allies have expressed concerns Russia would use cryptocurrencies, including a CBDC, to circumvent the punishments following its invasion of Ukraine in late Feb.

The Central Bank of Russia (CBR) initially opposed the legalization of cryptocurrencies. However, the CBR has been planning to issue a CBDC since 2019 and released a digital ruble concept last April.

FSB monitoring Russian crypto

On Monday, the Financial Stability Board (FSB) said they were carefully scrutinizing digital asset transactions to ensure compliance with the Russian economic sanctions. 

The FSB comprises financial regulators, central banks, and finance ministry officials from the Group of 20 economies. 

Early this month, the European Commission issued a statement confirming sanctions to block Russia from circumventing any rules. The order includes cryptocurrency transactions that are believed to present a loophole to avoid sanctions.

“These amendments create a closer alignment of EU sanctions regarding Russia and Belarus and will help ensure even more effectively that Russian sanctions cannot be circumvented, including through Belarus,” the statement added.