Bank of Russia weighs possibility of creating a digital ruble

The Bank of Russia has weighed the possibility of creating a digital ruble. The regulator published a report examining the viability of its issuance and intends to gather feedback on the matter by the end of the year.

Public Consultation Report by ForkLog on Scribd

According to the document, the Bank of Russia’s digital currency (CBDC) is viewed as a third form of the ruble alongside cash and cashless money.

“All three forms will be absolutely equal – just as 1 ruble in cash is equivalent to 1 ruble in non-cash form today, so too 1 digital ruble will always be equivalent to each of them. At the same time, holders of money will be able to freely transfer rubles from one form to another.”

The central bank said that, like cash and cashless rubles, the digital ruble will perform all the functions of money — a means of payment, a unit of account and a store of value.

The digital currency will take the form of a unique digital code and be stored in a dedicated electronic wallet.

It is envisaged that the digital ruble could be used offline — without access to mobile networks or the internet.

The regulator emphasises that realising this capability will require substantial research and the development of technologies and solutions.

The Bank of Russia says the CBDC is driven by a desire for the payments system to keep pace with changing needs of citizens and businesses, and to foster innovation in both the financial market and the economy as a whole.

In addition, the central bank noted that the CBDC could make payments faster, easier and safer.

Among other advantages of the asset is enhanced privacy.

“Transaction data on digital ruble payments will contain more limited information about the purpose of the payment and the recipient than existing payment systems, which reduces the risks of using personal information about consumer preferences,” the document says.

Information about transactions will be available to the Bank of Russia and financial intermediaries, the Bank added.

The document emphasises that the digital ruble differs from cryptocurrencies and stablecoins.

The latter are not money, as they “cannot fully perform all the functions of money, and there is no reliable guarantee of the legitimacy and reliability of their creation and use,” the regulator contends.

Implementation of the initiative involves several stages, including conducting public consultations, developing a concept for the digital ruble and a dedicated platform, and then testing with a limited group of users.

Only after this will the regulator decide on the issue of CBDC.

Feedback on the released Bank of Russia report is expected by December 31, 2020.

As reported, the possibility of issuing CBDC by the Bank of Russia has been discussed for a long time, but last year the head of the central bank Elvira Nabiullina said she did not see a need for such development.

Other countries are also studying the possibility of launching CBDCs — China is already testing the digital yuan, and U.S. authorities explore the use of a digital dollar.

For details on why central banks need their own digital currencies, read ForkLog’s exclusive.

How and why central banks create digital currencies (CBDC)

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