Will Russia’s digital ruble shield its economy from Western sanctions?
A waiver issued by the US Treasury allowing Russia to still transfer payments for its foreign bonds despite Western sanctions expired on Wednesday, leaving Moscow to face an eventual, inevitable default.
Russia made its last payment over some dollar-denominated bonds in April, and its last two payments for euro-denominated bonds just a few days ago to avoid defaulting on May 27.
As of today, Russia is officially unable to make any payment in US dollars, and it remains blacklisted from the euro market.
The country has already been cut off from the global payment markets, including SWIFT, and sanctions imposed after the invasion of Ukraine on February 24th have frozen its more than €560 billion worth of assets abroad.
An increasingly financially cornered Russia is now considering all options to keep its economy afloat, if not stable - even creating a “digital” rouble.
Russia is not the first country to develop its digital money capacities to modernise its financial system.
In 2020, the Bahamas was the first country to launch a national digital currency. In 2021, Nigeria developed the e-Naira, a digital currency used for in-store payments and money transfers.
Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts and Nevis, Saint Lucia, and St. Vincent and the Grenadines in the Eastern Caribbean Union have all developed their own digital currencies. Meanwhile, Jamaica said it will launch its own digital currency this year.
In Europe, the European Central Bank (ECB) has launched a two-year-long “investigative phase” of its project to launch a digital euro in October 2021, while Sweden is already testing the e-krona.
Some of the world’s biggest economies are getting on board: India is planning to introduce a digital rupee by
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