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Russia’s finalized CBDC law leaves questions over privacy

digital ruble cbdc

Yesterday, the Russian government signed a law introducing a central bank digital currency (CBDC) along with a corresponding electronic platform. The short document avoids any mentions of privacy, which presumably suggests the Bank of Russia could have access to customers’ personal data. It also allows individuals to bequeath the rights to a digital ruble account, thus giving heirs the right to inherit a testator’s CBDC funds in case of decease.

Russia’s new CBDC law

The new law comes after months of delays at Russia’s State Duma, which had held up the legislation needed to introduce the digital ruble. Latterly it was amended to support its usage by non-residents. Now that President Vladimir Putin has signed the document into law, the central bank will be able to move ahead with the live pilot that was scheduled to start in April.

Notably, the document seems pretty short. Whereas the recent digital euro bill was 62 pages long, the Russian law is only four pages. It refers to the introduction of a “third form of money” to complement the existing physical banknotes and commercial banks’ electronic money, and amends existing articles of the Russian civil code.

Questions over CBDC privacy

One thing that stands out is the notable absence of privacy provisions. Again, the digital euro bill mentioned privacy on 21 pages, but the digital ruble law gives the Bank of Russia significant powers. The central bank had previously stated it would be able to ban digital ruble access by certain institutions, companies, or individuals. It’s unclear whether this legislation allows this, but it seems likely. If so, this could turn the digital ruble into the sort of surveillance tool that many in the West are concerned about.

The text also inserts a supplementary clause that suggests the Bank of Russia will be in charge of “opening and maintaining digital ruble accounts”. It is unclear whether this means the central bank will complement the work of commercial banks, but this contrasts with the ECB’s approach, which explicitly states that the payment service providers will operate the accounts and Eurosystem the payment system.

Possibility of CBDC inheritance

Lastly, the new law allows for the inheritance of digital rubles from deceased relatives. According to TASS, the Russian news agency, “the document provides for the possibility of bequeathing rights to digital rubles, including through testamentary dispositions.” However, the rules for how this will work are yet to be formulated by the Russian government with the cooperation of the Bank of Russia.

TASS noted that the legislation doesn’t support loans denominated in digital rubles and prevents the use of the term “digital ruble platform” or anything similar in advertising.

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