Bank Of Russia Intends To Launch Digital Ruble In 2024

A paper detailing the priorities of the Russian central bank for its monetary policy between the 2023 and 2025 period was recently published.

It disclosed that the Central Bank of Russia (CBR) is planning on comprehensively implementing the digital ruble in the country in a time span of two years.

The monetary authority is working on the development of the central bank digital currency (CBDC) and it intends to connect different financial institutions to the project.

Monetary policy

A draft document was recently published by the Russian central bank that outlined the direction of the authority’s monetary policy for the next three years.

According to the paper, one of the key aims of the monetary authority would be to introduce a digital version of the ruble, the country’s fiat currency.

The paper said that the Central Bank of Russia (CBR) would begin connecting all credit institutions gradually to the digital ruble platform.

It also said that smart contracts would be used for increasing the number of payment methods available.

Even though the CBDC would be implemented on a full scale in about two years, there are some features that would not be introduced before 2025.

This includes the offline mood of the digital currency, along with bringing non-financial exchanges and organizations into the fold.

A phased approach

According to the CBR, using a phased approach for launching a central bank digital currency (CBDC) would enable market participants to get used to the new conditions.

The monetary authority also noted that they may impose certain restrictions, if required, such as restricting the quantity of digital rubles to be held in a single wallet.

They can also impose a cap on the amount of digital rubles that can be transferred in a single transaction.

Criticism

However, it is important to bear in mind that not everyone is in favor of the CBDC launch, as critics believe it could be a threat to the stability of the Russian banking system.

But, the Bank of Russia does not believe that the launch of the CBDC would result in a massive outflow of deposits, as bonus programs and interest payments help traditional financial institutions in attracting capital.

The CBR stated that the digital ruble would give Russian banks yet another incentive for enhancing the appeal of their bank accounts.

There are certain benefits of depositing money in bank accounts, as opposed to keeping cash in digital wallets. This is because the former is able to generate income.

Therefore, the Bank of Russia has no intention of paying interest on holdings of the digital ruble. The digital ruble’s latest timetable comes after an official statement made earlier.

As per the statement, the Central Bank of Russia (CBR) is accelerating the schedule of the project.

Olga Skorobogatova, the Deputy Governor, had announced in June that they would reveal the roadmap for the national currency’s full implementation would come by the end of next year.

The CBR also intends to start trials of actual transactions with users next year in April.