Digital financial technologies usage is expanding in Russia and globally. Cashless payments are becoming more common every day. In these circumstances, the public demands faster, more convenient and safer payment methods based on modern technologies.
Many central banks are discussing the possibility to introduce central bank digital currencies (CBDC). In response to the evolving needs of households and businesses, the Bank of Russia, according to its website, is assessing the possibilities and prospects of introducing a digital ruble. This work will be conducted in close cooperation with the public. In order to encourage an extensive discussion of this issue, the Bank of Russia has published a consultation paper.
A digital ruble is a digital form of the Russian national currency that will be issued along with the currently existing forms of money (cash and non-cash rubles). Individuals will be able to credit digital rubles to their electronic wallets and use them with the help of mobile or other devices both with and without an Internet connection (that is, online or offline).
Depending on their needs, households and businesses will be able to freely convert their money between forms (digital rubles into cash or bank account, and back). This requires a development of special technologies to enable the offline usage of digital rubles. Provided that, a digital ruble will be able to combine the benefits of cash and non-cash money.
Cutting-edge technologies used to develop a digital ruble will help reduce payment costs, increase financial inclusion and boost further improvement of payment technologies. The Bank of Russia will consider all these aspects, along with the uncompromising information security requirements, in its further work on the digital ruble project when selecting specific functional and technological solutions.
The Bank of Russia deems it crucial to launch a public discussion of the key aspects, benefits, potential risks, milestones and timeframes for the implementation of the digital ruble project, involving financial market participants, experts and the general public.
In view of economist Sergei Khestanov of the Russian Presidential Academy of National Economy and Public Administration, everybody talks about digital currencies now, hence Russia’s Central Bank’s willingness to experiment with a digital ruble. The experiment per se is harmless, he says, and will have no impact on the national economy, provided money supply does not change much. The new monetary instrument will not produce a major breakthrough though since there is little difference between the new digital ruble and the traditional fiat one.